Investment Group Purchases Assets of Krause’s Furniture

A Los Angeles investment group said Friday that it has paid $1.6 million for the assets of bankrupt Brea sofa maker Krause’s Furniture Inc., and plans to reopen as many as 40 stores nationwide by the end of November.

Hakakian Group, owned by three brothers, will operate stores under the Krause’s name in five West Coast states and under the Castro Convertibles name in three East Coast states, said Kay Hakakian, president of the group.

The brothers plan to add upscale leather and wood furniture to Krause’s standard styles for sofas, sectionals and chairs, he said.

Customers who put deposits on Krause’s furniture either will get discounts for new purchases or get the sofas they ordered, depending on completion costs and the availability of fabric, Hakakian said.

Up to 10,000 customers are owed a total of $7 million to $9 million for furniture they paid for but never received, said Michael Weiland, attorney for the Bankruptcy Court trustee. Clients will be contacted by mail within the next few weeks, Hakakian said.

The deal approved Tuesday by Bankruptcy Court Judge James N. Barr in Santa Ana also requires the group to pay as much as $1.8 million in back rent, depending on the number of store leases they elect to keep.

Hakakian said he and his brothers are looking for a new corporate headquarters and a smaller manufacturing plant.

Krause’s, long battered by losses, filed a bankruptcy petition in July, which allowed it to continue to operate. But with mounting debts of $100,000 a day, the company ceased production this month and laid off about 1,000 employees nationwide.