United Furniture files Chapter 11 bankruptcy following massive layoffs in Mississippi

United Furniture has been allowed by a federal judge to move to Chapter 11 bankruptcy less than two months after laying off its entire workforce.

On November 22, United’s 2,700 employees were notified via text message and email that the company had chosen to make major layoffs just two days before Thanksgiving. Out of the hundreds of workers, 1,100 were in located in north Mississippi.

“Due to unforeseen business circumstances the Company has been forced to make the difficult decision to terminate the employment of all its employees, effective immediately,” United stated in an email.

One month later, Wells Fargo and two additional creditors pressed for United to file Chapter 7 bankruptcy, as United/Lane Furniture owed almost $100 million to the three entities.

Chapter 7 bankruptcy would require all of United’s assets to be liquidated so the creditors can receive the funds they are owed.

Now, a judge with U.S. Bankruptcy Court in the Northern District of Mississippi has ruled that United can move from Chapter 7 to Chapter 11 bankruptcy.

Although Chapter 11 bankruptcy is a more expensive option for United, as the company is required to fulfill months and other reporting obligations and oversights to the creditors and bankruptcy court, United would be able to reorganize its debt over time. Instead of a total liquidation, the company will be allowed to sell assets and cut expenses while attempting to renegotiate with its creditors.

According to Judge Selene Maddox, the court will appoint an independent Chapter 11 bankruptcy trustee to be in charge of United’s liquidation process.

At this time, United has locations across Mississippi, including Amory, Belden, Hatley, Nettleton, Okolona, Vardaman, Verona and Wren. Six additional plants are located in North Carolina, with one also based in California.