Downturn in economy, furniture sales led to filing

May 19 (Reuters) – Barcalounger Corp, which began making reclining chairs in World War II,
has filed for bankruptcy protection and agreed to sell its assets, citing a sales downturn that
left it unable to survive.

In a filing in the Wilmington, Delaware, bankruptcy court, Chief Restructuring Officer John
Chapman said Barcalounger cannot generate enough profit to continue as a going concern
because of “the dire turn in national furniture sales due, in large part, to the global economic
downturn.”

According to the Chapter 11 filing, Barcalounger has between $1 million and $10 million of
assets, and between $10 million and $50 million of liabilities. One affiliate also filed for
protection from creditors.

Barcalounger said an affiliate of Los Angeles-based investment firm Hancock Park
Associates owns all its equity.

It said a Hancock affiliate, HPC3 Furniture Holdings, has agreed to bid $1.5 million for the
company’s assets under a “stalking horse agreement.”

If the bankruptcy court approves the sale, Hancock will be deemed to have waived a $32.44
million claim against the debtors, Barcalounger said.

Barcalounger began making recliners in 1940, according to its website, and has offices in
Martinsville, Virginia.

The case is In re: Barcalounger Corp et al, U.S. Bankruptcy Court, District of Delaware, No.
10-11637. (Reporting by Jonathan Stempel; Editing by Gary Hill)