TUPELO — It may look the same, sound the same, smell and feel the same, but the new River Oaks is not the same furniture company that filed bankruptcy last year and closed earlier in 1999.
Formerly based in Fulton, the newly created company, which began business April 1, purchased the operating assets of the former company that shares the same name and relocated corporate headquarters to Tupelo.
Incorporated in August 1987, the former River Oaks produced mid-priced leather and upholstery furniture, including sofas, love seats and chairs, under the brand names River Oaks, River Crest and Gaines, that were sold by regional and national furniture chains and independent retailers. Competitors included Furniture Brands International, Klaussner Furniture Group and La-Z-Boy.
“We streamlined the organization, enhanced quality, reduced costs and improved a lot of our manufacturing profit,” said Thomas A. Dieterich, chief executive officer.
Dieterich succeeded Len York, who stepped in as interim chief executive in March 1998 after Stephen L. Simons left the company as CEO.
However, after River Oaks filed a voluntary petition under Chapter 11 of the bankruptcy code in Aberdeen on March 3, 1998, and retained New York- and Charlotte, N.C.-based OSNOS & Co. to assist in its restructuring, Dieterich, a 25-year veteran of the furniture industry, was already listed as CEO, with York listed as CFO, according to reports from Hoover’s Online.
When asked questions about the previous company, including results of a lawsuit filed against its accounting firm for financial misstatements that led to its financial woes, Dieterich dismissed them. Instead, he stated that, “River Oaks is an entirely different company with different employees,” and briefly talked about plans for the new company.
“Many operational upgrades are almost complete, including the standardization of two factories in Mississippi and California,” Dieterich said. “This move not only reduces our corporate office expense, but marks the implementation of many of our new systems. We have technology available here that we didn’t have before and this will allow gradual implementation of our Internet-based factory and dealer systems.”
River Oaks Furniture Inc. had been plagued with woes long before the company closed its doors. In fact, problems started not long after the doors were open. One of the original investors filed and won a lawsuit, Ansin v. River Oaks Furniture Inc., for being fraudulently led to sell his shares of stock less than a year before a successful initial public offering that would have greatly increased the value of his shares.
A jury agreed that in 1992, Lawrence Ansin, a Massachusetts fabric manufacturer who died in 1993, was fraudulently induced to sell his shares — $100,000 for 7,500 share of common stock — 10 months before a successful initial public offering.
According to Ansin, defendants Thomas Keenum and Stephen Simons, two company executives who were also original investors, intended to take the company public from the start but failed to disclose their intention to the plaintiff. A jury awarded the plaintiff $1.1 million in compensatory damages on Rule 10b-5 and common law fraud claims.
In 1997, Market Guide reported that for nine months ending Sept. 28, 1997, revenues for River Oaks Furniture, Inc. dropped 1% to $88 million and had a net loss of $3.9 million. At that time, the company listed 1,571 employees. Soon after, more than 100 employees were laid off from the Fulton plant. However, in the same year, Upholstery Design & Manufacturer listed River Oaks as a Top 50 company.
Last year, after financial misstatements led the company to switch accountants and sue its previous ones, the company’s stock was delisted from NASDAQ (OAKSE).
In March 1998, River Oaks Furniture, Inc. filed for Chapter 11 protection from creditors so it could reorganize. In April, The Sun Herald reported that the company had obtained $32.9 million in financing with plans to emerge from Chapter 11 protection by the end of the year, according to company officials. BNY Financial Corporation provided the debtor-in-possession financing.
“River Oaks opened April 1,” Dieterich said. “The old company is history.”
When asked about production lines and a five-year plan, Dieterich declined to comment, adding that, “it is a private company.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at email@example.com.