United Furniture owner accused of trying to grab cash after laying off 2,700 people overnight

The owner of United Furniture Co., who disappeared after laying off 2,700 employees in the middle of the night just days before Thanksgiving, reappeared in court this week to push for a Chapter 11 reorganization, and creditors accuse him of trying to seize remaining cash and assets. companies for yourself.

David Belford, a wealthy Ohio businessman who is the chairman and majority shareholder of a Mississippi company, asked the court last week to be allowed to file for a Chapter 11 reorganization and move the case to Ohio after a UFI creditor sued. 31th of December. approve liquidation in accordance with chapter 7.

According to the filing, which seeks to move the case from US Bankruptcy Court in the Northern District of Mississippi to the Southern District of Ohio, where Belford’s hedge fund is based, UFI received $10 million to “conduct the sale process” of its a real estate portfolio that he says is worth over $50 million.

But Wells Fargo, which claims UFI owes it $99.2 million, accused Belford of creating a “new narrative” of the closure to liquidate UFI’s assets in favor of its “family trust,” according to a filing Wednesday. According to the statement, the company’s Chapter 11 petition is “an exercise in revisionist history and contains gaping factual gaps.”

Specifically, Wells Fargo criticized Belford’s claim in a Jan. 6 lawsuit that the company has “management, employees, a chief restructuring officer, an independent director, an outside general counsel and a host of experienced restructuring professionals” in place “for the last more than a month” after unexpected layoffs to protect the company’s assets.

Instead, the bank accused Belford of “failure”, claiming that a team of outside specialists had been hired.”in just a few weeks Closure of UFI” and that “none of these individuals have taken any significant action to preserve and protect UFI’s assets.”

On January 6, UFI rebutted claims it had ceased operations, calling them “curious at best, or more likely dishonest”, noting that on December 21 it mustered an army of professionals, including Oxford Restructuring Advisors, to apply to court. bankruptcy in Ohio, where Belford lives and runs the investment firm Stage Capital.

The company also claims that the appointment of a trustee in the case will lead to “corporate chaos.”

Lawyers expected the company to file for bankruptcy shortly after closing. Instead, it took UFI “50 days or more” after closing to file for bankruptcy, according to a filing filed on Wednesday. Accordingly, Wells Fargo claims it has been forced to shell out more than $1.5 million since Nov. 21 for services including insurance, utilities and 24-hour security to protect the company’s 15 buildings and furniture that sits in factories.

The San Francisco-based lending giant claims Belford has “secure interests” in UFI’s real estate and is suggesting that he take over the company “to manage a process solely for his own benefit.” According to Belford’s Chapter 11 petition, lenders, including Wells Fargo, “will be left with the leftovers while UFI will focus on making its shareholders whole,” the statement said Wednesday.

After an unexpected bloodbath on November 21, when employees learned they had been fired from a flurry of late-night emails and text messages, Belford remained silent for several weeks. The following month, he stated in an interview with an Ohio business publication that he was a “passive investor” in the company with a “limited” understanding of UFI’s finances.

According to social media posts, in the days and weeks following the layoffs, employees were not given information on how they could re-enter the buildings to collect their personal belongings and were concerned that they would not receive a W2 application.

While the legal documents are constantly changing this week, sources say it’s still unclear why UFI took so long to file for bankruptcy protection.

“There was a confusing period of radio silence,” said Jack Reisman, a lawyer representing California employees who are suing UFI after they were fired. “But now there’s the visibility that bankruptcy provides, which wasn’t there.”

UFI attorney Mark Melikyan did not return a call for comment.