Avoiding liquidation, LL Flooring has sold roughly half its store fleet to its founder for roughly $40 million and a nearly 1 million-square-foot warehouse to a data center giant for about $104 million in a U.S. retail bankruptcy saga that took an unusual turn.
Richmond, Virginia-based LL Flooring, closed on its asset sales, which total about $144 million, according to a court filing this week. F9 Investments, a Miami Beach, Florida-based private equity firm led by LL Flooring's founder and ex-CEO Tom Sullivan, has acquired 219 of the retailer's 430 stores and the company's intellectual rights for cash consideration of $40 million to $43 million. The purchased stores will remain in operation, and this week F9 began running full-page newspaper ads announcing that “Lumber Liquidators,” going back to the chain’s original name, was back.
And Overland Park, Kansas-based QTS Realty Trust has purchased LL Flooring's 995,792-square-foot distribution center at 6121 White Oak Creek Drive, Sandston, Virginia, for $104.8 million.
LL Flooring is shuttering the stores that F9 isn't buying. And it plans to temporarily lease back part of the space, 616,000 square feet, for two years at the distribution center it sold, according to CoStar data.
F9 and QTS didn't immediately respond to emails from CoStar News on Thursday seeking comment.
A number of retailers this year have filed for Chapter 11 bankruptcy protection and then opted to liquidate and close all their stores. And for a short time, that appeared to be LL Flooring's fate. The company filed for bankruptcy in August, saying it would just shut some locations and seek a buyer. Then came the twists and turns.
Surprise announcement
In early September, the retailer said it planned to wind down its entire business and close all 430 stores. Then, in a surprise announcement less than a week later, LL Flooring said it had struck a sales agreement for some stores with F9 that would keep the chain alive.
Sullivan, a critic of the company's management, has been trying to acquire LL Flooring for several years. He founded the company as Lumber Liquidators in 1994 and served as its CEO and president from that time until 2006, and then again from May to October of 2015.
Like many retailers, LL Flooring said it had suffered financially following the onset of the COVID-19 pandemic, woes it documented in court filings. But it had a challenging legacy, as well. In 2015 the chain was the subject of a scathing "60 Minutes" expose about dangerous levels of formaldehyde found in flooring it had brought in from China. The company changed its name to LL Flooring in the wake of that scandal.
Jason Delves, president and CEO of F9 Brands, a F9 Investments unit, will serve as the CEO of the stores that have been acquired. He touted his career in the flooring business.
Enjoying synergies
"I have close to 25 years of experience in the flooring and related retail industry," Delves said in an affidavit filed with the bankruptcy court. "I have been an executive officer of various subsidiaries of F9, including Cabinets To Go, Southwind Building Products, LLC and Gracious Homes. Previously, I was the president of Beasley Flooring Products, Inc., a hardwood and engineering flooring products manufacturer and a supplier to the debtors during my tenure and president of BLC Hardwood Flooring, LLC, a hardwood flooring products manufacturer and also a supplier to the debtors during my tenure."
F9 is returning LL Flooring to its original name, Lumber Liquidators.
“Yellow and black is back,” the chain’s newspaper ad says. “The great deals that made Lumber Liquidators famous are back in 219 locations nationwide.”
F9 "believes that the acquired assets will enhance synergies with the rest of F9’s businesses," according to Delves, and is "forming a new entity to run operations of the 219 acquired stores."
F9 is also completing the acquisition of land adjacent to its distribution facility in Tennessee to build a new LL Flooring distribution center for the acquired stores following the expiration of the two-year lease with QTS, Delves said.