Harvey Electronics, Inc., based in Lindenhurst, NJ, filed a voluntary petition for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the Southern District of New York. The company will continue to operate its business and manage its property as a debtor in possession, and expects to promptly file a plan of reorganization.
The company's management said it hopes to emerge from court protection by the spring of this year. It cited several events that led to the Chapter 11 filing.
The distraction and expense related to unsuccessful merger negotiations with Myer-Emco, Inc. cost Harvey over $1.2 million. The merger talks broke off after financing became more difficult as credit markets tightened. The expense of the failed Myer-Emco transaction, plus the inability to raise new equity capital in the months immediately following the failed acquisition, triggered a delisting of its common stock from the Nasdaq and created an event of default under the existing senior secured credit agreement.
Michael E. Recca, Harvey's Interim CEO at the time of the filing, was named chief restructuring officer of the debtor. In a statement he said, "We regret that Harvey's best path to reorganization is through the courts, but despite the other distractions over the past year, our custom installation business remains strong.
"This step allows us to accelerate the transformation of our business from a specialty retailer with a home installation business to a home installation expert with appropriate retail distribution. While we will be closing and right sizing some locations, we expect the majority of our stores will continue to play a critical role in our future operations."
Recca signaled a potential emphasis on service more than retail product sales. "Most importantly," he continued, "Harvey believes it has the finest team of sales consultants, design engineers, and field installation technicians in the business, and with their help we will continue to provide our customers superior audio and video entertainment solutions in the tri-state area."
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