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    Home » Major Furniture Retailer Abruptly Closes and Files for Chapter 7 Bankruptcy
    Entrepreneur News

    Major Furniture Retailer Abruptly Closes and Files for Chapter 7 Bankruptcy

    AramideBy AramideOctober 23, 20247 Mins Read
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    An image showing Chapter 7 bankruptcy files
    Source: Pinterest
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    A luxury brand that sells high-end furniture is closing all its stores in the United States. OKA announced the store closures after declaring bankruptcy. OKA had opened stores in Dallas, Houston, and Westport in Connecticut. However, it tried to grow too fast in the U.S., and this expansion led to its failure.

    OKA Files for Chapter 7 Bankruptcy in the US

    OKA has thrived in the industry for years. However, the furniture company is now facing financial problems that threaten its future. The company has already shut down its U.S. operations and has stopped accepting new orders from its U.S. website and hardware stores because it filed for Chapter 7 bankruptcy.

    An image of a chapter 7 bankruptcy file
    Source: Pinterest

    The company shared a statement regarding their recent financial struggle. “As a result of the Chapter 7 filing, we have ceased all business operations in the U.S. immediately. Due to this, in the meantime, we are no longer accepting new orders from our U.S. website or stores.”

    OKA has been struggling financially for some time. This struggle started especially after buying the U.S. furniture brand Wisteria in 2019. In 2021, OKA took out an $11.5 million loan to cover its losses. 

    However, its attempts to expand into the U.S. did not go as planned, hence the owners’ decision to file for bankruptcy and close down their American business.

    ALSO READ: Red Lobster Is Closing More Restaurants Due to Ongoing Bankruptcy 

    No Details on Liquidation Plans

    In May 2024, OKA filed for Chapter 7 bankruptcy. This means they are selling off their assets to pay back the money they owe. This decision came after several efforts to save the business, including taking loans in 2021.

    An image showing the word bankruptcy
    Source: Pinterest

    The British furniture brand, known for its stylish home décor and furniture, has not shared any clear plans about handling its liquidation. Even though OKA has stopped operating in the U.S., it has not explained how it will handle its remaining assets or what will happen next. 

    Company to Continue Operations in the U.K.

    Although OKA has stopped operating in the U.S., it has not ended there. The furniture company plans to continue operating in the U.K. It has filed for a Company Voluntary Agreement (CVA) in U.K. courts. This is similar to a Chapter 11 bankruptcy in the US. However, the CVA will allow the company to keep running while it pays off its debts.

    An image of a gavel on a few bank notes
    Source: Pinterest

    If the CVA is approved, OKA will make some changes to help it stay afloat. One of the changes includes closing down one of its 13 stores in the U.K. The company might also possibly lay off up to 40 out of its 250 employees. This change will affect many of the company’s distribution centers and main offices.

    There is good news for the company. The furniture retailer store chain might get a potential cash injection. To help the business, OKA’s owner, Investindustrial, is prepared to invest money in the company if the CVA is approved by the courts and those they owe. A representative from the restructuring firm Teneo managing the CVA mentioned that the company could receive up to $5 million to support its operations.

    ALSO READ: Chicken Soup for the Soul Entertainment Files for Bankruptcy Protection 

    History of OKA

    OKA may not be a well-known name in the United States, but it has a long and interesting history. The company describes itself as not just a furniture company but a company that is focused on creating products that help people make time with family and friends memorable. They aim to help people enjoy life by making their homes more beautiful and cozy.

    An image of Lady Annabel Astor
    Source: Twitter(X)

    OKA does not just sell furniture; it offers a range of home items that represent a complete lifestyle. The furniture company began with three women: Lady Annabel Astor, Sue Jones, and Lucinda Waterhouse. These three women brought unique designs from Asia to Western customers. 

    Lady Annabel Astor, always looking for unique pieces to decorate her holiday home, teamed up with Sue and Lucinda. Sue Jones, Lady Annabel’s sister-in-law, was an experienced decorator. Her decorating pedigree included work experience at Jasper Conran and Colefax and Fowler. Lucinda Waterhouse was a skilled horticulturist who had a company that made beautiful faux flowers. They came together and created a collection of home décor items.

    After some years, Lady Astor eventually sold the company to an Italian firm for about $51 million. However, even though she had already sold the company, she stayed on as a non-executive director until this year.

    Lady Annabel Astor, now 75 years old, recently stepped down from the company’s board after some decisions the owners took. She stepped down from OKA’s board in May 2024 after disagreeing with the new owners over how quickly they were expanding in the U.S.

    Another reason why she left is because the owners rejected her plan to lead a management buyout. She wanted to repurchase the company using her family’s money. The exact amount of her offer, however, is not known. After leaving OKA, Lady Astor said she was sad to leave but hinted that she had a new business idea.

    Furniture Industry Faces Challenging Times

    OKA is not the only furniture company facing challenges. Although people have always needed furniture, and that hasn’t changed, where they buy it has. Shoppers now prefer discount stores like IKEA for cheaper furniture.

    An image of furniture and home decor
    Source: Pinterest

    Many people also look for furniture on platforms like Facebook Marketplace and shop at places like Goodwill to find what they need at lower prices. Although a cheap bed or couch might not last very long, it will still serve a purpose. When people are trying to save money, they cut back on spending in areas where they can.

    This shift in consumer shopping habits has caused problems for many well-known furniture brands. Some have gone out of business. Big names like Mitchell Gold and Bob Williams have been liquidated, which means they had to sell off their assets. Z Gallerie, another furniture store, filed for bankruptcy protection before selling its assets in May.

    What Is Chapter 7 Bankruptcy About?

    In the U.S., Chapter 7 bankruptcy is the preferred way for businesses to declare bankruptcy, as it is a legal way for people or businesses to handle their debts. It helps them get rid of most of their debts and start fresh. The following is a breakdown of how it works:

    An image of the word bankruptcy written on a newspaper
    Source: Pinterest
    1. What It Is For: Chapter 7 is meant for individuals or businesses that cannot pay their bills. It helps individuals eliminate many types of debt, like credit card bills, medical expenses, and personal loans. For businesses, it helps to keep creditors at bay while they sell assets and repay what they owe, just like in OKA’s case.
    1. Liquidation: When someone files for Chapter 7, a court appoints a trustee. A trustee is like a manager for a bankruptcy case. This trustee might sell some of the person’s or business’ belongings or assets to repay creditors’ debt. However, some items, like essential household goods or tools needed for work, are usually protected and cannot be sold.
    1. Discharge of Debts: Once the trustee sells the necessary items and pays off as many creditors as possible, most of the remaining debts are wiped out. This means the person does not have to pay them anymore, giving them a chance to start over without old financial burdens.
    1. Who Can File: Not everyone can use Chapter 7 bankruptcy. People and businesses must pass a test called a means test. This means the court will check if their income is low enough compared to the average income in their state. If their income is too high, they might have to look into other types of bankruptcy. For example, the Chapter 13 bankruptcy.
    1. Effect on Credit: Filing for Chapter 7 can significantly hurt a business or person’s credit score. It can stay on their credit report for up to ten years, making it hard for them to borrow money or get credit in the future.

    Chapter 7 bankruptcy allows those struggling with debt to clear it away and start anew. However, it also seriously affects their financial future, which they must consider. OKA filing a Chapter 7 bankruptcy shows the tough times many furniture stores face. Hopefully, they can keep their doors open in the U.K. and maybe one day return to the United States.

    bankruptcy Chapter 11 bankruptcy Chapter 7 bankruptcy hardware store OKA furniture company
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