Judge approves LL Flooring’s sale of Sandston plant, assets

A Delaware Bankruptcy Court judge on Monday approved the sale of 219 LL Flooring stores to an entity connected to F9 Group, which is owned by Lumber Liquidators founder and former CEO Thomas Sullivan. The court also OK’d the $104.75 million sale of the bankrupt flooring company’s eastern Henrico County distribution center to an entity connected to data center giant QTS Data Centers.

The transaction between Henrico-based LL Flooring, which filed for Chapter 11 bankruptcy in August, and purchaser LumLiQ2 and guarantor F9 Investments is expected to close by Sept. 30, according to court documents. The two parties reached a last-minute deal earlier in the month after LL Flooring — formerly known as Lumber Liquidators — announced it would be closing all of its 400-plus stores nationwide. Instead, 211 stores will close over the next few months, according to the company. In a court document filed Sept. 3, F9 offered LL Flooring $44.5 million in cash at closing and at least $22 million in assumed liabilities in a $66.5 million bid this summer, and the company also said it had paid a deposit of $4.1 million toward the total purchase.

SNA NE LLC, a limited liability corporation connected with QTS Data Centers, reached an agreement in September to purchase LL Flooring’s 995,792-square-foot distribution center on 97.55 acres in the White Oak Technology Park for $104.75 million. QTS owns much of the technology park property, as well as all 622 acres of White Oak Technology Park II. In a separate ruling, U.S. Bankruptcy Judge Brendan Shannon approved that deal too.

According to the Associated Press, Sullivan said that the stores purchased by F9 will be renamed Lumber Liquidators, and that the stores will align with Cabinets to Go, one of F9’s brands.

Sullivan founded Lumber Liquidators in 1994, and he departed in 2016, after a 2015 “60 Minutes” investigation into allegations that laminate flooring produced in China and sold by Lumber Liquidators in the United States had violated California Air Resources Board regulations and failed tests for maximum formaldehyde emissions, even after California authorities notified the company of the issue in 2013 and 2014. In 2019, the U.S. Department of Justice fined the company $33 million to settle allegations of securities fraud, which also included a $6 million payment to the U.S. Securities and Exchange Commission.

In 2020, Charles E. Tyson became the company’s president and CEO, and renamed the company LL Flooring in 2021. In 2022, the business opened 17 stores, but sales dropped the following year. Net sales in 2023 were down 18.5% from 2022, from $1.11 billion to $904.7 million. LL Flooring closed eight locations and opened three in 2023, and net losses last year amounted to $103.5 million, a large increase from a net loss of $12.1 million in 2022.

Last year, Sullivan purchased 9.4% of LL Flooring stock, and F9 attempted to purchase LL Flooring to merge with Cabinets to Go, but LL’s board rejected the deal. However, in July, Sullivan, F9 Brands President and CEO Jason Delves and Jill Witter, a Texas-based legal consultant for F9 Investments, were elected to LL Flooring’s board in a proxy war. The three resigned from the board as F9 and LL Flooring neared a deal on September’s acquisition agreement.