United Furniture lenders reveal chaos surrounding 2,700 overnight layoffs

The Nov. 21 layoffs — in which workers learnedof email and text messages — took place just hours after the Mississippi-based company allegedly demanded “substantial capital immediately” from its lender Wells Fargo, signaling that it couldn’t continue operations without the cash, creditors claimed in a court filing late last week.

Wells Fargo and two other creditors are asking a US bankruptcy judge to force United Furniture into a Chapter 7 liquidation.Wells Fargo claims in the court petition it is now owed more than $99 million. It didn’t specify the amount requested, but said it was “over and above” what its credit facility allowed, which had been approved last summer for $130 million secured by the company’s assets.

The layoffs took place just hours after the company allegedly demanded “substantial capital immediately” from Wells Fargo.Looking to rein in the chaos, Wells Fargo said it hired a crisis-management firm called Focus Management Group to secure UFI’s properties and begin an orderly liquidation. Nevertheless, the process has become “overwhelming” as other creditors have swarmed in to make claims, according to court papers.

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