Finding the parallels between Klaussner and UFI/Lane | Sheila Long O’Mara

As of this writing, we’re a short week out from the news that Klaussner Home Furnishings was closing up shop. Once this column is published, we’ll be on the date – Aug. 21 – the company estimated that all employees would be out of jobs and the shutdown would be complete.

While that date may hold true, there will be a lot more to the Klaussner shutdown than what has already come to light through reporting and storytelling long after the official date of closing has passed.

News of the sudden shutdown brought back a flood of memories from last fall’s quick and fateful closure of another furniture company – United/Lane Furniture. In that case, the company informed its nearly 2,700 employees via an overnight email, just ahead of Thanksgiving, that they had been terminated and the company was out of business.

Like United’s news in November, longtime Klaussner employees were caught off guard by the news of the closure across seven factories.

Here’s a look at three things the company closures have in common.

1 The swiftness of the closures

While industry rumors about both companies’ futures were part of regular conversation, no official action was taken by management at either Klaussner or United until what appeared to be very swiftly. With Klaussner, the announcement came at the end of a Monday. For United, the news hit employee inboxes in the late hours of the evening.

Under the federal Worker Adjustment and Retraining Notification Act, employers with more than 50 workers are required to give 60 days notice ahead of factory closures. United never made a filing in North Carolina, California or Mississippi where it had operations. Klaussner filed its notice on the same day it announced the closing to its employees. Both companies kept their employees in the dark; about 2,700 at United and 884 at Klaussner.

2 Lenders halt funding

Both companies ran afoul of their lenders. In the case of United, Wells Fargo said in court documents that company executives approached the bank the day of its closure saying it needed additional money to continue operations. The bank said it needed more information and more time to make a decision before approving the funds. United was out of time.

In Klaussner’s statement, it said that its lender had “unexpectedly” refused to fund operations anymore. Without the funding, the company said it couldn’t sustain operations and was forced to close.

3 Left retailers scrambling

Longtime partners and significant players in the industry, Klaussner and United Furniture had extensive lists of retail customers that valued the products and the relationships built over the years. The sudden closing of the companies left retailers scrambling to secure new partners and remerchandise their floors. Like the employees, many of the retailers were caught off-guard and flat-footed and continue to untangle the mess with customers and sales associates who had become comfortable selling from the two lines over the years.

As we continue to learn more about the circumstances around the Klaussner closing, we’ll share the information online and in our pages. Much like the United situation, it may take some time for all of the details to come to light.

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