Protection Sought

Cannell & Chaffin, an old-line Los Angeles company whose 70 years of business included a contract to help furnish Hearst Castle, recently filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.

Under Chapter 11, a company is allowed to continue operating while it works out a plan to pay its creditors. In Cannell & Chaffin’s case, creditors number more than 1,000.

Cannell & Chaffin and its commercial interiors subsidiary filed for bankruptcy protection on Feb. 24. The firm listed liabilities of about $8 million and assets of nearly $4.3 million; Cannell & Chaffin Commercial Interiors listed liabilities of about $3.8 million and assets of about $3.3 million.

“We’re staying in business and we’re planning to stay with the name,” said Danford M. Baker, president of Cannell & Chaffin and grandson of S. Bartley Cannell, who founded the company in 1917 with George Chaffin.

“We’re very optimistic,” Baker said. “We’re going to work with creditors to see that they get as much as they can.”

The bankruptcy filing is partly the result of the company’s decision last year to get out of the retail furniture business because of the changing nature of the marketplace. Wholesale showrooms have offered stiff competition for retailers of high-priced furniture. Instead, Cannell & Chaffin planned to focus on its commercial and residential interior design business.

But the company had difficulty when it tried to close its four residential furniture locations, and “the only way to resolve the leases was to file” for bankruptcy, Baker said. A large outlet on Wilshire Boulevard, which had been on the market for two years, finally sold on Feb. 19, he said.

In addition, Cannell & Chaffin had a large amount of outstanding debt that had accumulated during the last few years, Baker said. Part of that was from some large residential and commercial projects in the Middle East that were not paid for after oil prices plunged, he said.

“We wanted to give us a chance to reorganize,” Baker said. “We are very focused in a small location with our key people and doing a lot of new work,” he said, adding that the company has taken on seven new projects since the bankruptcy filing.