Lane furniture just shut down entire business

[Bill Dufour]

https://www.furnituretoday.com/financial/report-lane-shuts-down-all-employees-terminated/

Bill D

[Maurice Mcmurry]

That seems like a tacky, cowardly, very rude way to communicate big news to your workers. I hope there is a back story and the workers had been being prepared for the news.

[Bruce Wrenn]

Notice that ALL BENEFITS were terminated without COBRA benefits. This means all employees lost health coverage immediately, without recourse for coverage. Sick, pregnant, planning surgery, etc, forget it! Oh yeah, Happy Thanksgiving - signed United Furniture Tech. (AKA Lane Furniture.) I'm sure it was a difficult decision for management. The drivers out on the road had two choices, either complete their trip back to warehouses, or abandon equipment where it was and hitch a ride home. If you did the latter, what is Lane going to do? Can't fire you, as they had already done that.

[George Bokros]

I thought it was required by federal law that COBRA benefits are automatic. Sure there will be some legal investigation on that.

[Tom M King]

When I clicked on the link to look, there was a big ad right in the middle for Hinckley yachts.

[Frederick Skelly]

I saw this story a few days ago. I dont understand the immediate termination of benefits and no COBRA either. I also thought the WARN Act would apply. But WARN is a complex story from what I gather in a quick look. I'd have to bet the company lawyers studied it up and down before the Board pulled this stunt and think they qualify for an exception. Still a really crappy thing to pull (though we've seen it before).

If interested, I found a few bits on the Dept of Labor page on WARN Act:
* Certain mass layoffs and plant closings will meet the criteria of the Worker Adjustment and Retraining (WARN) Act; the criteria are complex, but some basic levels are layoffs of 50 or more workers at a single site, where 50 is at least one-third of the total full-time workforce at that site, or any layoffs of 500 or more workers at a single site. Other times employers may publicly announce layoffs through the media.

* If an employer believes their situation is the result an economic crisis, it may apply the unforeseen business circumstance exception; however, there could be a burden on the employer to prove why it could not plan 90 days in advance.

[Maurice Mcmurry]

When I clicked on the link to look, there was a big ad right in the middle for Hinckley yachts.

I wonder if the former CEO and upper management bought yachts with their severance?

[Mike Henderson]

I thought it was required by federal law that COBRA benefits are automatic. Sure there will be some legal investigation on that.

I looked into this one time. From what I remember, COBRA only applies when the company is a going concern. What COBRA allows you to do is "tag along" on the company's existing health insurance policy. When that policy is terminated, perhaps when the company closes or declares bankruptcy, there's nothing to tag on to.

I agree that the company really did their employees wrong. I can imagine someone who is being treated for cancer, or has a life saving surgery scheduled (maybe a heart procedure) - they're going to be in a world of hurt.

Mike

[Frederick Skelly]

I wonder if the former CEO and upper management bought yachts with their severance?

I'll bet they aren't in the world of hurt these employees are.

[Bill Dufour]

I wonder how soon before the auctions of tools and lumber? I read they have their own metal stamping plant which may be sold as a separate business.
Bill D

[Mel Fulks]

My Father’s sister was married to a guy who was the “company treasurer “. The closing of the company was caused by acrylics and Nylon stuff. Not mean people.

[Mike Henderson]

My Father’s sister was married to a guy who was the “company treasurer “. The closing of the company was caused by acrylics and Nylon stuff. Not mean people.

Unless they ran their finances out to the end, the least they could have done was provide 6 months of health insurance - to give people time to find another job that has health insurance.

People who have existing conditions essentially can't purchase a health insurance policy - or it's so expensive they can't afford it.

Mike

[Maurice Mcmurry]

My Father’s sister was married to a guy who was the “company treasurer “. The closing of the company was caused by acrylics and Nylon stuff. Not mean people.

Does this mean supply chain issues are the culprit? Would that be a back story everyone was aware of?

[Jim Mackell]

The closing of the company was caused by acrylics and Nylon stuff. Not mean people.

Unless aliens descended suddenly with free acrylics and free nylon stuff, they had time to put together an orderly shutdown. Time will tell but something stinks here. Either malfeasance or gross stupidity.

[Edward Weber]

Something certainly smells fishy to me.
Last few months I saw ads for Lane hiring, then to abruptly fires everyone.

[Mel Fulks]

Something certainly smells fishy to me.
Last few months I saw ads for Lane hiring, then to abruptly fires everyone.

Sometimes there are just late possibilities that just don’t work ,often because they were just pipe-dream ,Hail Mary, alcohol over -doses.
According to business scientists.

[Mel Fulks]

Just looked up “hope chests” and there is a bunch of that stuff ! And it’s most cedar chests. There are also lots of old chests and coffers for
sale all the time. They have been making them for hundreds of years ,and they don’t wear out fast enough ! But I’m sure furniture scientists
are trying to fix that ! One thing standing in their way is hokey modern building notions like caulk and insulation.

[Rich Engelhardt]

Since I tend to beieve journalism has died in the world and been replaced by sensationalism - I pass on making a judgement call on this until all the facts are in.
I just hope it isn't the start of a new way of doing things.

[Alex Zeller]

It sounds like they were in serious trouble last summer when they fired the execs running the company. My guess is the company was trying to get a loan to bail it out and it didn't come through. Once the details come out I'm betting that there's no money in the company's bank accounts. No money, no way to pay salaries.

[Rick Potter]

Whatever the reason, I suspect the name 'Lane Furniture' will be sold to an offshore company which will be up and selling soon.

I also agree with the employee(?) who said, in the comments, that the top management will get bonus severance pay.

It is sad to see so many one time household company names being used to shill import items on TV ads. Thinking of Bell & Howell, Fuller Brush, etc.

[roger wiegand]

It sounds like they were in serious trouble last summer when they fired the execs running the company. My guess is the company was trying to get a loan to bail it out and it didn't come through. Once the details come out I'm betting that there's no money in the company's bank accounts. No money, no way to pay salaries.

Speaking as someone who has had to shut down companies a couple of times (small biotechs that ran out of funding), that just says there was really bad planning on the part of management combined with an utterly callous disregard and disrespect for the people who worked there. Funding a transition for your employees is something you plan for and deal with if you are a competent and responsible employer. It's the decent thing to do.

Running out of money isn't something that sneaks up on you; it's something that, as a manager, you constantly make contingency plans for.

[Steve Demuth]

People who have existing conditions essentially can't purchase a health insurance policy - or it's so expensive they can't afford it.


It has not been legal in the United States to price medical insurance differently based on the insured's medical condition since 2014. As long as Lane's former employees aquire new coverage quickly, the price they pay for private insurance will be based solely on the plan they choose, and their ability to pay.

That doesn't make this company less reprehensible, nor by any means mean that its former employees aren't in some tough situations. Getting new insurance in a timely fashion if your in the middle of a health "episode" is trying and scary, and it shouldn't be necessary. But being priced out of the insurance market because you have an existing medical condition is not one of the problems.

[Curt Harms]

Unless they ran their finances out to the end, the least they could have done was provide 6 months of health insurance - to give people time to find another job that has health insurance.

People who have existing conditions essentially can't purchase a health insurance policy - or it's so expensive they can't afford it.

Mike

Not meaning to go political but I thought "Obamacare" fixed that.

[Rob Luter]

It's pretty clear none of this snuck up on anyone.

In June of 2021, the Board of Directors terminated its CEO, CFO and executive vice president of sales, and named a former Standard Furniture President as CEO. A move like this suggests a dire set of circumstances and a shift to survival mode. No one is thinking about a gentle transition for their employees, they are thinking about keeping a company afloat so it can continue to have employees. If I was a Lane employee this would have been a clue for me to dust off the resume.

Following the purge of the "C" Suite, They restructured their sales organization, naming new Presidents for both the Domestic and Import business units. Step 2 of the reorg.


Following that, the company laid off 300 employees and closed or repurposed several facilities. They did this to stop the bleeding. They had way too much capacity. Two facilities transitioned from Manufacturing to Warehousing. That means they don't need heat or lights. More bleeding stopped and chances for survival improved.

In my experience all these steps take place to either make the remaining company a more attractive target for acquisition or more suitable to receive refinancing. When both fall through you turn off the key. It's a sad state of affairs.

[Brian Elfert]

How did a furniture company go out of business with all the furniture people bought during COVID? There are quite a few furniture companies in the southeast USA that are backlogged by six months to a year.

[Mike Henderson]

It has not been legal in the United States to price medical insurance differently based on the insured's medical condition since 2014. As long as Lane's former employees aquire new coverage quickly, the price they pay for private insurance will be based solely on the plan they choose, and their ability to pay.

That doesn't make this company less reprehensible, nor by any means mean that its former employees aren't in some tough situations. Getting new insurance in a timely fashion if your in the middle of a health "episode" is trying and scary, and it shouldn't be necessary. But being priced out of the insurance market because you have an existing medical condition is not one of the problems.

I didn't know that. My experience was back in the early 2000's and they definitely charged based on your medical history.

Mike

[Perry Hilbert Jr]

Some states require companies to continue benefits for a specified time period, other states do not. Given the lack of quality of the last Lane recliner we purchased new, it is little wonder that the thing company dived. Our recliner, purchased for my wife on doctor orders after her back surgery, fell apart three times within the first six months. It spent 6 weeks in the furniture sales companies back room the first time. I ended up making a consumer complaint against the company and retailer and got my money back.

[Jim Koepke]

Some states require companies to continue benefits for a specified time period, other states do not. Given the lack of quality of the last Lane recliner we purchased new, it is little wonder that the thing company dived. Our recliner, purchased for my wife on doctor orders after her back surgery, fell apart three times within the first six months. It spent 6 weeks in the furniture sales companies back room the first time. I ended up making a consumer complaint against the company and retailer and got my money back.

That seems to be an oft repeated story in our consumer/capitalist society, upper management, often new management, decides to cut cost and raise their own salaries, then they take the money and run.

It leaves everyone else holding an empty bag.

jtk

[Andrew More]

How did a furniture company go out of business with all the furniture people bought during COVID? There are quite a few furniture companies in the southeast USA that are backlogged by six months to a year.

I can't speak to your local area, but around here the various used places are full of unwanted furniture of various designs. A lot of it seems to be things that are no longer useful (secretaries, roll top desks) or cheap and nearly destroyed. I think there was a huge demand for modern desks, but maybe not so much for the type of furniture they make and sell. A lot of that was probably inherited from the people who have passed in the last couple of years.

[Mel Fulks]

Another thing happening now is retirees getting rid of good stuff. Obvious that their children don’t want it. Almost every day on the local
Next Door app we see something fine for sale at a low price. Few pieces are “snapped up”.

[Brian Elfert]

People getting rid of lots of out of style furniture shouldn't cause a furniture manufacturer to go under. A lot of people want new furniture that is in style. I recall reading stuff a number of months back on how retailers ordered too much furniture from China and other overseas countries and now they have way too much inventory. It was taking so long to get product and sales were strong so they ordered a lot. By the time the furniture came in people were starting to spend on things others than their homes.

High end USA manufacturers like Hancock & Moore still have order backlogs of at least six months.

[Mel Fulks]

And lots of really expensive wines are being sold , while the kool aid stands are hurting. People are beginning to discern the expensive stuff
costs more and they don’t want to be stuck with the cheap stuff , so they have to “act now “. One indication of fine modern furniture is it’s
often given to a TV game show contestant ….who is wearing a pie on his face. Tradition runs strong.

[Mike Soaper]

I feel for the folks who lost their jobs.

This thread brings to mind the 1950's movie Executive Suite with William Holden. It's about the executive challenges and shenagans of a furniture company, Holden gives a rousing presentation to the board at the end of the movie

[Alex Zeller]

Speaking as someone who has had to shut down companies a couple of times (small biotechs that ran out of funding), that just says there was really bad planning on the part of management combined with an utterly callous disregard and disrespect for the people who worked there. Funding a transition for your employees is something you plan for and deal with if you are a competent and responsible employer. It's the decent thing to do.

Running out of money isn't something that sneaks up on you; it's something that, as a manager, you constantly make contingency plans for.

The fact that the board of directors fired all the top management at Lane only a few months ago tells me that they weren't overseeing what the management was doing. When they found out they fired them, installed new people, and tried to save the company. I would like to think they didn't know just how bad it was and wouldn't have taken this action unless there was no other choice.

[Alex Zeller]

People getting rid of lots of out of style furniture shouldn't cause a furniture manufacturer to go under. A lot of people want new furniture that is in style. I recall reading stuff a number of months back on how retailers ordered too much furniture from China and other overseas countries and now they have way too much inventory. It was taking so long to get product and sales were strong so they ordered a lot. By the time the furniture came in people were starting to spend on things others than their homes.

High end USA manufacturers like Hancock & Moore still have order backlogs of at least six months.

My neighbor worked for a large ski boot manufacturer that owns several smaller companies. One is a hiking boot company. One of their employees made a mistake and ordered 10x the number of boots (not just one style but every style and size) so the boot company made and shipped them. They were lucky enough to be able to absorb it but still made several mistakes. The first was that they didn't have anything in place for the boot company to confirm an increase of that size. the second was what to do with them. At first they kept them in semi trailers but when it became clear that it would take years to sell the boots they sold them off at a discount to a company. The retailers who were selling the boots got mad that a discounter was selling them for half the price they could so they had to buy all the boots back. I think in the end they destroyed the boots.

[Keegan Shields]

If the company was heavily in debt, it may have been a function of the priority of creditors. There may not have been enough money left over for front line employee benefits.

Contractual obligations like executive compensation would need to be filled prior to that also (I would guess).

Unfortunately its all too common.

[derek labian]

It seems almost certain they tried to keep the company afloat and were unable leading to continue; a catastrophic failure. It could be a bond that came due, lack of a loan or financing, etc. I doubt this is a function of management trying to enrich themselves as these situations are extremely stressful for managers as well (who probably are also out of a gig). When you are trying to turn the company around and something falls apart suddenly, this is what it looks like. I feel for everyone involved :(

[Ronald Blue]

Regardless of whether in the end it had to be sudden they took a cowards way out in how it was done. It shows that they didn't care in the slightest about the people who were the back bone of the operation. This smells of management covering their own interests and that includes investors. I feel bad for those who depended on these jobs and the accompanying benefits.

[Bill Dufour]

Speaking as someone who has had to shut down companies a couple of times (small biotechs that ran out of funding), that just says there was really bad planning
I have a feeling small startup companies kind of have the possibility of going bankrupt in the back of their minds for years. This means maybe they recognize the writing on the wall sooner. and cut harder and faster then an old line company. 110 years for lane since 1912 founding.
Bill D

[Perry Holbrook]

This lay off is local news here. Although most of the large furniture factories are gone, there are several smaller ones still operating. The local news did an interview with one of them. He said there are plenty of jobs available for any of the people who were layed off.

This in no way makes this any easier or makes their lives less stressful, but at least it may help some of them.

[Brian Holcombe]

Regardless of whether in the end it had to be sudden they took a cowards way out in how it was done. It shows that they didn't care in the slightest about the people who were the back bone of the operation. This smells of management covering their own interests and that includes investors. I feel bad for those who depended on these jobs and the accompanying benefits.

Investors generally do not make out well when a company has to fire all of its staff and shut down. It normally means they are going to get pennies on the dollar for their shares. The bond holders will likely get burned as well. I’m not sure why this is bring framed as some sort of planned management windfall but it seems very unlikely to me. It’s terrible for all involved, including management. I sincerely doubt anyone was looking forward to firing the entire labor force prior to the holidays, most folks just aren’t built like that.

[Frederick Skelly]

Investors generally do not make out well when a company has to fire all of its staff and shut down. It normally means they are going to get pennies on the dollar for their shares. The bond holders will likely get burned as well. I’m not sure why this is bring framed as some sort of planned management windfall but it seems very unlikely to me. It’s terrible for all involved, including management. I sincerely doubt anyone was looking forward to firing the entire labor force prior to the holidays, most folks just aren’t built like that.

Shutdowns happen. But the things Im reading do not make me think the owner of this company cared enough to try harder. The Board wanted to file Chapter 11. The owner seems to have been the one that decided to shut down.

[Brian Holcombe]

My understanding is that restructuring mostly depends on wether or not the debt holders are willing to restructure. They may have decided in this case that they prefer to liquidate.

Owners are typically equity holders, equity holders get their shares paid out only after all debts are paid, which is why they typically get next to nothing for their shares do I don’t see a whole lot of financial incentive for this move.

[Tom M King]

Looks like Ikea is hanging in there:

https://www.inter.ikea.com/en/performance/fy22-financial-results

[Rich Engelhardt]

Latest news is - David Belford - the owner of United Furniture has fled the country and flew to Paris.

[Mel Fulks]

Latest news is - David Belford - the owner of United Furniture has fled the country and flew to Paris.

Well, what I read was he was flown to Paris….but maybe he was drinking a lot of Red Bull !!