Cypress, CA (August 25, 2010) – In what’s being called a “grand slam” by court attorneys and other parties involved in the case, Home Organizers, Inc., the parent company of Closets by Design, Inc. and Closet World, Inc., announced that a Federal court in California has granted its request to dismiss it and its’ subsidiaries short-lived Chapter 11 filings following the replacement of its lender.
The announcement comes just four months after Home Organizers, Inc. and its subsidiaries filed a voluntarily petition for reorganization under Chapter 11. The voluntary filing was necessary after the company’s lender unexpectedly demanded immediate and full payment of a loan that had matured, even though Home Organizers, Inc. had made regular, timely payments over the loan’s life and had substantially paid down the balance. Ironically, at the time of the voluntary filing in March, 2010, Home Organizers, Inc. reported record sales and the company had plenty of funds to operate the business and make payments to its lender.
In addition, in a highly unusual and notable aspect of the quick resolution, not only were Home Organizers, Inc.’s vendors supportive of the dismissal, but the company is also paying all of its vendors 100 percent on the dollar for any payments that were due at the time of the Chapter 11 filing.
“This filing was never about us – it was something we needed to do to protect the companies, their employees, and their vendors,” said Frank Melkonian, Chairman and CEO of Home Organizers, Inc. “We acted swiftly and confidently and emerged a clear winner in the end. I’m very proud of my management team for making certain that the filing had no impact on our operations, vendor relationships, or customer service.”
In fact, it was business as usual for the company throughout the four-month proceedings. Every aspect of Home Organizers operations, from sales to the delivery and installation of product, were unaffected throughout the filing, and there was no impact on the subsidiary CBD Franchising, Inc. or its franchisees, who are independent owners and operators in their individual markets. Melkonian noted that all company employees retained their jobs, and vendors were consistently paid on time while the filing was active.
In order to achieve the dismissal, a private group, Exclusive Lending, LLC, made up outside investors and some members of senior management, was formed to purchase the debt from the previous lender. Home Organizers and Exclusive Funding entered into an agreement to administer the loan on terms very beneficial to the Company.
“Despite rumors spread by industry competitors, we were never in a financial struggle. In fact, we’ve emerged stronger and more secure with our new lender,” said Melkonian. “After years of providing unmatched product and service in the home organization industry, we were able to successfully emerge from our latest challenge brought on by the recession. We’re confident in the future that lies ahead as we focus on growth, introducing new products, and providing our customers the best service they’ve come to expect.”
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