ABC Carpet & Home is scrambling to stave off bankruptcy: sources

Swanky furnishings retailer ABC Carpet & Home is scrambling to stave off chapter within the wake of the pandemic, The Post has discovered.

The 125-year-old outlet — recognized for its luxurious stash of house items, from $375 velvet throw pillows to $12,000 silk-and-wool rugs — not too long ago retained an funding financial institution and a prime restructuring lawyer to assist it keep afloat, in accordance to sources.

The firm is “exploring whether bankruptcy makes sense,” stated a supply with data of the state of affairs, including that fourth-generation proprietor Paulette Cole has personally poured hundreds of thousands of {dollars} into the enterprise to preserve it going through the pandemic.

Despite the money infusions, the shop’s stock has been slashed, the supply stated. ABC is likewise locked in a dispute with its landlord over $1 million in lease that threatens the lease at its flagship retailer in Manhattan’s Flatiron District, the corporate confirmed to The Post.

A display of carpets
Shoppers count on lush shows at ABC Home & Carpet, however the retailer has had to slash stock.
Paul Bruinooge/Patrick McMullan

The house furnishings vacation spot — dubbed New York’s “most magical home store” by House Beautiful magazine in 2019 — retained funding agency B. Riley Financial earlier this 12 months to assist it discover strategic choices and safe financing, sources stated.

B. Riley has helped ABC discover some money, in accordance to the supply with data of the state of affairs. But apparently it’s not sufficient, because the retailer extra not too long ago tapped Oscar Pinkas, head of Greenberg Traurig’s restructuring observe, sources stated.

If ABC can’t safe extra funds and renegotiate its money owed with distributors and landlords, it could be compelled to file for Chapter 11 — and presumably liquidate its enterprise, the supply added.

An ABC spokesperson confirmed the retailer has retained B. Riley and Greenberg Traurig “to handle strategic legal and financial matters concerning the past year’s many challenges.” The spokesperson didn’t tackle whether or not it’s exploring chapter.

A photo of Paulette Cole dressed up in black and fuchsia
Paulette Cole has reached into her personal pocket to stabilize ABC Home & Carpet’s future.
Getty Images

Known for its brightly coloured furnishings and unique assortment of rugs from India, Morocco and China, ABC was hit onerous by the pandemic, which compelled it to shutter its flagship retailer and an outlet retailer in Brooklyn in March 2020.

ABC reopened its four-floor flagship retailer at 888 E. nineteenth St. final 12 months — however to a metropolis devoid of most of the well-heeled clients and vacationers who used to frequent its halls, which have been likened to a luxurious bazaar thanks to its muddle of things stacked excessive and even dangling from the ceiling. 

Making issues worse, ABC’s enterprise depends on in-person buying. Despite its lofty costs, the corporate’s Web website is primitive in contrast with cheaper rivals, with restricted functionality to zoom in on materials, for instance. 

“They don’t have the kind of merchandise that lends itself to online sales,” stated a supply shut to the corporate. “Who wants to buy a $10,000 rug without seeing it first?”

In an October interview with the New York Times, proprietor Cole and ABC Home & Carpet CEO Aaron Rose admitted the retailer was behind in “digital marketing” and can be “gearing up” in that space.

Cole, the great-granddaughter of Lower East Side carpet peddler Sam Weinrib, has been shrinking the retailer for a number of years. In 2018, she closed its three-decade previous carpet retailer throughout the road from its flagship. And in 2016, Cole shuttered ABC’s vast Bronx Warehouse outlet.

In 2018, Cole advised The Post, “We’ve been consciously right-sizing the business and being responsive to New York real estate and the online phenomenon. We invested in our online strategy, but we are looking to invest further in that.”

A customer browsing a display of Christmas ornaments
The retailer lends itself to in-person shopping and shopping for somewhat than on-line buying.
Getty Images

When Cole closed the carpet retailer on Broadway, she additionally inked a deal to sell four of ABC’s six floors at 888 to an actual property agency for $133 million. At the identical time, she established an LLC known as AMMA421, which turned “a sub-landlord for a portion of the store,” in accordance to the ABC spokesperson.

In July, AMMA421 filed for chapter safety, itemizing Cole as its principal, courtroom filings present. Now AMMA421 and the constructing’s proprietor, Columbia Property Trust, are locked in a dispute that might end in ABC dropping its flagship lease.

“We are closely monitoring the dispute between AMMA421 and its landlord as the outcome could impact our lease,” the ABC spokesperson advised The Post in an announcement.

AMMA421 has not been in a position to pay what it owes to the owner, in accordance to a Wednesday courtroom submitting. The landlord of the flagship constructing is ramping up stress on the retailer as properly, in accordance to courtroom filings.

A shopper looking at dishes
The house owners desperately need to keep away from closing the gorgeous Manhattan Flatiron District retailer — after the pandemic already compelled the shuttering of an outlet in Brooklyn.
Getty Images

“The landlord is ready to evict ABC,” perhaps as a result of “it wants to convert the whole building to condos,” stated distressed-debt skilled Adam Stein-Sapir.

ABC could have retained B. Riley, Stein-Sapir added, to discover a purchaser for the enterprise or solicit new buyers. The funding financial institution might additionally take a stake within the storied retailer.

If ABC is unable to safe extra financing, it additionally has Greenberg Traurig available, Stein-Sapir stated, “which has a well-known bankruptcy practice.”

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