RoomStore Inc., a leading furniture retailer headquartered in Richmond, Virginia, filed for Chapter 11 Bankruptcy Protection on December 12,2011, in U.S. Bankruptcy Court in Richmond. (link). The company listed around $ 56 million in assets and more than $ 52 million in debts in the court filing. RoomStore is hoping to reorganize under bankruptcy protection. The company explained the situation through their website (link) and declared this filings will provide them with the time and resources to address their financial challenges and also that the company will not go out of business. According to the company website, the company currently has 64 stores and will continue to operate its stores in the ordinary course of business while completing this process. RoomStore is also a 65% shareholder in Mattress Discounters Group, LLC.
Has this bankruptcy arrived silently? According to MORE Ratings, not really! The ratings assigned to the company were B (Weak) and CCC (High Danger), in 2010 and 2011, respectively (below the report). The leverage result worsened (shareholders’ funds decreased dramatically while liabilities increased) in 2011.The quick ratio indicator is also keeping its alarming levels in three years (stocks increased, the sales fell over). All profitability indicators are in non return levels (increasing loss levels, see the income statements) in both 2010 and 2011.