The Final Chapter is 11

Heilig-Meyers Co. (Richmond,Va.), the 88-year-old retailer that once presided over an empire of small-town furniture stores, is beginning today to liquidate most of the remaining 375 Heilig-Meyers stores. The company had filed for bankruptcy protection in August 2000, and on Tuesday the U.S. Bankruptcy Court for the Eastern District of Virginia approved the selection of a four-company partnership to orchestrate the process. The liquidators agreed to pay 45 percent of the value of the merchandise, estimated to be about $100 million. After paying $45 million and expenses, the remaining proceeds will be split between Heilig-Meyers and the liquidators. The going-out-of-business sales should end by the end of August.

At one time, Heilig-Meyers operated 814 stores, mostly in markets of 50,000 population or below. But the chain began downsizing in January 2000, reported a $589 million loss in the quarter ending Aug. 31, 2000, and declared bankruptcy shortly thereafter. As part of the company's Chapter 11 bankruptcy restructuring plan, it shut down more than 400 stores under the Heilig-Meyers banner, sold its Rhodes Furniture chain and all but 7 percent of Mattress Discounters.

Its profitable RoomStores chain, which displays and sells furniture in complete room packages, is expected to survive. In fact, some of the 30 or so Heilig-Meyers stores excluded from the liquidation sale may be converted to the successful RoomStore format, which is selling entire rooms, complete with accessories and other decor items. Also, the 70 RoomStore locations are in more-metropolitan markets instead of the small towns that Heilig-Meyers traditionally chose to place stores.

Even though the sales performances for the Heilig-Meyers stores in January and February were consistent with the business plan filed with the bankruptcy court, the operating loss was still $14 million in January and $8 million in February, and results in March and early April were said to be significantly below the chain's plans.

Scheduled closures include stores in Alabama, Arizona, Colorado, Florida, Georgia, Iowa, Illinois, Indiana, Kentucky, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Nevada, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Virginia and West Virginia. The company expects to lay off about 3200 employees at those stores, and none of them will receive severance pay.