By Tara Deschamps in Toronto
Bad Boy Furniture Warehouse Ltd. is aiming to restructure its business through a filing made under the Bankruptcy and Insolvency Act.
The Greater Toronto Area furniture company says in Ontario court filings that the move has become necessary because Bad Boy is operating in a "challenging" economic environment.
The company says high interest rates, falling home sales and a tight retail climate are impacting its business.
The conditions have left Bad Boy owing many of its vendors, including most of its appliance and furniture suppliers. It is also facing significant challenges sourcing more inventory, which is impacting its retail business.
"The decision to commence these proceedings was taken after much deliberation," according to an advisory by KSV Restructuring Inc, the licensed insolvency trustee named in the proceedings.
Bad Boy also urged customers who have paid a collective $4.5 million in deposits for furniture that has yet to be delivered to contact their credit card company to obtain a refund.
Where possible, the company said it will work with customers to complete orders, if the cost of the merchandise is less than the balance owing, or if other arrangements can be made with the customer.
Shawn Gibson of Barrie purchased $2400 worth of furniture on Nov. 5 and he can't get it.
Gibson expected the chair, loveseat and couch to be delivered by Bad Boy on Friday, but the company told his wife they had no truck going to Barrie that day so it couldn't be delivered and it could be delivered on Saturday.
When he got the same story on Saturday about the inability to deliver his furniture, Gibson went to the store where he was presented with a sheet of paper that notified him about what he said was Bad Boy's possible bankruptcy and he would be unable to get his money bank. Gibson paid for his purchase on debit.
His couch and loveseat was sitting in the store and when he tried to take it, Gibson said he wasn't allowed.
When Gibson went back to Bad Boy on Sunday, he wasn't alone.
"There were a lot of angry people at the store," he said.
Besides being unable to get a refund, there is something else that has left Gibson shaking his head.
"We're not sure why if its our stuff is there why we can't take it, and why some of the stuff is being resold," said Gibson. "They tried to tell me that my furniture is actually in a warehouse in Pickering despite me seeing what I purchased sitting there."
He intends to be at his bank on Tuesday for help.
"We're going to keep pushing," Gibson said.
While at the store on Saturday, Gibson saw a lady come in and purchase a loveseat which she was allowed to take out herself.
"That's the part that gets me," he added. "I don't understand why people are allowed to buy things and take it but I can't retrieve what's mine."
To keep the business afloat, Bad Boy is considering a liquidation sale at some or all of its stores to wind down inefficient portions of its business.
The filing marks a significant turn in the history of the company started by entrepreneur Mel Lastman, who dropped out of school to work at an appliance store before opening his own on Weston Road in Toronto in 1955.
Lastman went on to become the mayor of North York, a suburban region of Toronto, and later, the first mayor of the newly amalgamated City of Toronto.
By 1975, he sold the business. The Globe and Mail reported a consortium of buyers it did not name purchased the business for $2 million. Shortly after, the company filed for bankruptcy.
Mel Lastman's son Blayne revived Bad Boy in the early nineties and these days, the Pickering, Ont.-headquartered retailer is wholly owned by him under Lastman Furniture Inc.
Blayne Lastman and his father, who died in 2021 at age 88, routinely appeared in ads together that blanketed Toronto television and radio stations. They were often clad in black and white jailhouse uniforms and shouting, "Who's better than Bad Boy? Nooobody."
These days, the chain has 12 stores throughout southern Ontario, including Barrie, and 275 employees.
Bad Boy's Superior Court of Justice filings show it has about $25 million in assets, including inventory and store fixtures and roughly $26 million in liabilities.
The parent company owes many of its vendors, including most of its appliance and furniture suppliers.
Its debts owed to unsecured creditors total $13.7 million and include $2.3 million to Whirlpool Canada LP, $840,924 to Samsung Appliances, $404,410 to LG Electronics Canada Inc. and $317,382 to RioCan Real Estate Investment Trust.
Bad Boy's court filing didn't take Joanne McNeish, a Toronto Metropolitan University associate professor specializing in marketing, by surprise.
Emerging from COVID-19 restrictions, she said many people weren't searching for furniture because they had already redesigned their homes or bought essential pieces during the pandemic.
Recession predictions kept others away from furniture purchases too.
"The discretionary things like 'I'm really tired of the way my living room set looks,' during an economic recession, we put that purchase off until we feel more confident about the economy," McNeish said.
She also thought Bad Boy's advertising wasn't as effective at attracting sales from a new generation, which likely saw the company's marketing efforts as dated and were drawn to rivals like Ikea, the Swedish furniture giant which offers even lower prices.
Local television and radio stations along with newspapers will have a revenue hole to fill because Bad Boy was a steady advertiser, but McNeish said it had already pared back on its advertising efforts in recent years.
At this point, she believes the best way forward for the brand is to sell off assets like any real estate Bad Boy owns.
"I always hate to see a company go into bankruptcy and that is sort of protection for restructuring," she said.
Files from Barrie 360
