wanky furniture retailer ABC Carpet & Home is scrambling to stave off bankruptcy in the wake of the pandemic.
The 125-year-old outlet — known for its luxurious stash of home goods, from $375 velvet throw pillows to $12,000 silk-and-wool rugs — recently retained an investment bank and a top restructuring lawyer to help it stay afloat, according to sources.
The company is “exploring whether bankruptcy makes sense,” said a source with knowledge of the situation, adding that fourth-generation owner Paulette Cole has personally poured millions of dollars into the business to keep it going during the pandemic.
Despite the cash infusions, the store’s inventory has been slashed, the source said. ABC is likewise locked in a dispute with its landlord over $1 million in rent that threatens the lease at its flagship store in Manhattan’s Flatiron District.
The home furnishings destination — dubbed New York’s “most magical home store” by House Beautiful magazine in 2019 — retained investment firm B. Riley Financial earlier this year to help it explore strategic options and secure financing, sources said.
B. Riley has helped ABC find some cash, according to the source with knowledge of the situation. But apparently, it’s not enough, as the retailer more recently tapped Oscar Pinkas, head of Greenberg Traurig’s restructuring practice, sources said.
If ABC can’t secure more funds and renegotiate its debts with vendors and landlords, it may be forced to file for Chapter 11 — and possibly liquidate its business, the source 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 address whether it’s exploring bankruptcy.
Known for its brightly colored furnishings and exotic collection of rugs from India, Morocco and China, ABC was hit hard by the pandemic, which forced it to shutter its flagship store and an outlet store in Brooklyn in March 2020.
ABC reopened its four-floor flagship store at 888 E. 19th St. last year — but to a city devoid of many of the well-heeled customers and tourists who used to frequent its halls, which have been likened to a luxury bazaar thanks to its clutter of items stacked high and even dangling from the ceiling.
Making matters worse, ABC’s business relies on in-person shopping. Despite its lofty prices, the company’s Web site is primitive compared with cheaper rivals, with limited capability to zoom in on fabrics, for example.
“They don’t have the kind of merchandise that lends itself to online sales,” said a source close to the company. “Who wants to buy a $10,000 rug without seeing it first?”
In an October interview with the New York Times, owner Cole and ABC Home & Carpet CEO Aaron Rose admitted the retailer was behind in “digital marketing” and would be “gearing up” in that area.
Cole, the great-granddaughter of Lower East Side carpet peddler Sam Weinrib, has been shrinking the retailer for several years. In 2018, she closed its three-decade-old carpet store across the street from its flagship. And in 2016, Cole shuttered ABC’s vast Bronx Warehouse outlet.
When Cole closed the carpet store on Broadway, she also inked a deal to sell four of ABC’s six floors at 888 to a real estate firm for $133 million. At the same time, she established an LLC called AMMA421, which became “a sub-landlord for a portion of the store,” according to the ABC spokesperson.
In July, AMMA421 filed for bankruptcy protection, listing Cole as its principal, court filings show.
Now AMMA421 and the building’s owner, Columbia Property Trust, are locked in a dispute that could result in ABC losing its flagship lease.
“We are closely monitoring the dispute between AMMA421 and its landlord as the outcome could impact our lease,” the ABC spokesperson said in a statement.
AMMA421 has not been able to pay what it owes to the landlord, according to a Wednesday court filing. The landlord of the flagship building is ramping up pressure on the retailer as well, according to court filings.
“The landlord is ready to evict ABC,” maybe because “it wants to convert the whole building to condos,” said distressed-debt expert Adam Stein-Sapir.
ABC may have retained B. Riley, Stein-Sapir added, to find a buyer for the business or solicit new investors. The investment bank could also take a stake in the storied retailer.
If ABC is unable to secure more financing, it also has Greenberg Traurig on hand, Stein-Sapir said, “which has a well-known bankruptcy practice.”