Furnishings Close-Out Begins as State Accedes

Furnishings 2000’s liquidation sale began as planned over the weekend after the attorney general’s office determined that state regulators could not halt the three-month sale that is designed to raise cash needed to pay off the bankrupt furniture chain’s creditors.

The sale is being held at 22 of Furnishings 2000’s Southern California locations, including its El Cajon and Kearny Mesa stores. The sale was authorized earlier this month by a federal Bankruptcy Court judge in New York City, who also allowed Furnishing 2000’s creditors committee to spend $18.5 million to buy additional furniture that would make the sale more attractive to shoppers.

The state Department of Consumer Affairs last week questioned the legality of the sale because California law generally limits liquidation sales to inventory on hand or that was ordered before the declaration of bankruptcy. State law does not allow bankrupt firms to purchase additional merchandise to be sold at liquidation or going-out-of-business sales, consumer affairs officials said last week.

However, the attorney general’s office learned Friday that “the bankruptcy judge specifically approved this kind of sale,” said Herschel Elkins, a senior assistant attorney general. Consequently, the attorney general’s office would not contest the sale, Elkins said.

Elkins said his office would monitor Furnishings 2000’s sale to ensure that advertising does not mislead consumers.

Furnishings 2000, which earlier this year moved its corporate headquarters from San Diego to Mira Loma, entered Chapter 11 bankruptcy proceedings in September in New York City. Furnishings 2000 owes an estimated $20 million to $30 million to its creditors, including $1.2 million that is owed to customers who ordered, but never received, furniture.

The liquidation sale will take place at 22 of Furnishings 2000’s California stores. After the sale ends, Furnishings 2000’s stores in Southern California will be closed.