Form 8-K - Current report

NONE false 0001396033 0001396033 2024-09-30 2024-09-30

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 30, 2024

 

 

 

LL Flooring Holdings, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

 

Delaware		001-33767		27-1310817
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

4901 Bakers Mill Lane, Richmond, Virginia		23230
(Address of Principal Executive Offices)		(Zip Code)

[phone]

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading symbol(s)		Name of exchange on which registered
Common Stock, $0.001 par value per share		LL		*

*  On August 12, 2024, the New York Stock Exchange (“NYSE”) determined to commence proceedings to delist and immediately suspended the registrant’s Class A common stock, par value $0.001 per share, from trading on the NYSE. Thereafter, the Registrant’s shares were delisted from, and ceased to trade on, the NYSE and began trading on the over-the-counter market under the symbol “LLFLQ”

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

 

 

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Item 1.01

Entry into a Material Definitive Agreement.

On September 30, 2024, LL Flooring Holdings, Inc., a Delaware corporation (the “Company”) entered into an amendment (the “F9 Purchase Agreement Amendment”) to the previously announced asset purchase agreement, dated September 6, 2024 (the “F9 Purchase Agreement”), by and among the Company and its subsidiaries named therein (collectively, the “Sellers”), LumLiq2, LLC and F9 Investments, LLC for a going concern sale of the business, providing for the acquisition of substantially all of the Sellers’ assets related to approximately 219 stores and inventory at the distribution center located in Sandston, Virginia (the “Distribution Center”). The foregoing description of the F9 Purchase Agreement Amendment does not purport to be complete and is qualified in its entireties by reference to the full text of the F9 Purchase Agreement Amendment, which is attached hereto as Exhibit 2.1 and is incorporated by reference into this Item 1.01.

 

Item 1.02

Termination of a Material Definitive Agreement.

On September 30, 2024, the Company repaid in full all outstanding indebtedness and terminated all commitments and obligations under its Senior Secured, Super-Priority Debtor-In-Possession Credit Agreement, dated as of August 14, 2024 (as amended, rested, amended and restated, supplemented, or otherwise modified and in effect prior to the date hereof, the “DIP ABL Credit Agreement”), by and among LL Flooring, Inc. as the lead borrower thereunder and the other borrowers party thereto, the guarantors party thereto, the lenders party thereto), and Bank of America, N.A.

 

Item 2.01

Completion of Acquisition or Disposition of Assets.

On September 30, 2024, the Company and certain of its subsidiaries completed the transactions contemplated by the F9 Purchase Agreement, as amended by the F9 Purchase Agreement Amendment (the “F9 Transaction”).

Also on September 30, 2024, the Company completed the transactions contemplated by the previously announced purchase and sale agreement, dated August 30, 2024 (the “Sandston Purchase Agreement”) for the sale of the Company’s Distribution Center, by and between a subsidiary of the Company and SNA NE, LLC (the “Sandston Transaction”).

The foregoing descriptions of the F9 Purchase Agreement and the F9 Transaction do not purport to be complete and are qualified in their entireties by reference to the full text of the F9 Purchase Agreement, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 9, 2024 and is incorporated by reference into this Item 2.01, and the F9 Purchase Agreement Amendment, dated September 30, 2024, which is attached as Exhibit 2.1 to this Current Report on Form 8-K and is incorporated by reference into this Item 2.01. The foregoing description of the Sandston Purchase Agreement and the Sandston Transaction do not purport to be complete and are qualified in their entireties by reference to the full text of the Sandston Purchase Agreement, which was attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K dated September 3, 2024 and is incorporated by reference into this Item 2.01. A copy of the press release announcing the completion of the foregoing transactions is filed as Exhibit 99.1 to this Current Report and incorporated herein by reference.

 

Item 2.03

Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.

 

Item 7.01

Other Events.

On October 1, 2024, a press release announcing the closing of the F9 Transaction and the Sandston Transaction was issued. A copy of the press release is filed as Exhibit 99.1 to this Current Report and incorporated herein by reference.

 

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Forward-looking Statements

Certain information in this Form 8-K may constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, including but not limited to, information relating to the DIP ABL Agreement, the F9 Purchase Agreement, the Sandston Purchase Agreement and the Chapter 11 proceedings and any other statements that refer to our expected, estimated or anticipated future results or that do not relate solely to historical facts. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “assumes,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “targets,” “potential,” “will likely result,” and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control, including, among other things, the following: the outcome of our contingency planning and restructuring activities; settlement discussions or negotiations; the Company’s liquidity, financial performance, cash position and operations; the Company’s strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on the Company’s businesses as a result of filing for and operating under Chapter 11 protection; the Company’s ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 proceedings; the Bankruptcy Court rulings in the Chapter 11 proceedings and the outcome of the proceedings in general; the adequacy of the capital resources of the Company’s businesses and the difficulty in forecasting the liquidity requirements of the operations of the Company’s businesses; the unpredictability of the Company’s financial results while in Chapter 11 proceedings; the Company’s ability to discharge claims in Chapter 11 proceedings; negotiations with the holders of the Company’s indebtedness and its trade creditors and other significant creditors; risks and uncertainties with performing under the terms of any arrangement with lenders or creditors while in Chapter 11 proceedings; the Company’s ability to conduct business as usual; any challenges and risks associated with the Company continuing to operate and manage its business under Chapter 11 protection, including the provision of any transition services to the purchaser and any risks to the Company’s remaining estate; the Company’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the Company; the Company’s ability to continue to pay employees, suppliers and vendors; the ability to control costs during Chapter 11 proceedings; adverse litigation; the risk that the Company’s Chapter 11 cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the Company’s ability to secure operating capital; the Company’s ability to take advantage of opportunities to acquire assets with upside potential; the Company’s inability to maintain compliance with financial covenants and operating obligations which would expose us to potential events of default under the Company’s outstanding indebtedness; the Company’s ability to incur additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes; a significant reduction in our short-term or long-term revenues which could cause us to be unable to fund our operations and liquidity needs or repay indebtedness; and supply chain interruptions or difficulties. Therefore, the reader is cautioned not to rely on these forward-looking statements.

The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission. Such filings are available on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.

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Item 9.01

Financial Statements and Exhibits.

 

Exhibit No.		Description of Exhibit
2.1		First Amendment to the Asset Purchase Agreement by and among LumLiq2, LLC, as Purchaser, F9 Investments, LLC, as Guarantor, and LL Flooring Holdings, Inc. and its Subsidiaries Named Therein, as Sellers, dated as of September 30, 2024.
99.1		Press Release dated as of October 1, 2024.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

LL FLOORING HOLDINGS, INC.
By:		/s/ Alice G. Givens
Name:		Alice G. Givens
Title:		Chief Legal, Ethics and Compliance Officer

Date: October 1, 2024

Exhibit 2.1

EXECUTION VERSION

FIRST AMENDMENT TO THE PURCHASE AGREEMENT

This FIRST AMENDMENT TO THE PURCHASE AGREEMENT (this “Amendment”), dated as of September 30, 2024, is by and among LumLiq2, LLC, a Delaware limited liability company (“Purchaser”), F9 Investments, LLC, a Florida limited liability company (“Guarantor”), and LL Flooring Holdings, Inc., a Delaware corporation (the “Company”) and the Subsidiaries of LL Flooring that are indicated on the signature pages attached hereto (together with the Company, each, a “Seller,” and collectively, “Sellers”). Purchaser, Sellers and Guarantor are referred to herein individually as a “Party” and collectively as the “Parties.”

W I T N E S S E T H:

WHEREAS, the Parties entered into that certain Asset Purchase Agreement, dated as of September 6, 2024 (the “Purchase Agreement”); and

WHEREAS, the Parties wish to amend the Purchase Agreement in the manner set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties hereby agree as follows:

 

1.	Amendment.

 

i.

Section 2.1 of the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

“Consideration. The aggregate consideration (collectively, the “Purchase Price”) to be paid by Purchaser for the purchase of the Acquired Assets shall be: (i) the Fixed Amount; plus (ii) the Inventory Price; plus (iii) all Assumed Cure Costs; and less (iv) the sum of the Net Deposit Refund Liability Amount.

 

ii.

Section 2.3 or the Purchase Agreement is hereby amended and restated in its entirety to read as follows:

“(b) On or before the date that is four (4) Business Days prior to the anticipated Closing Date, Sellers shall deliver to Purchaser a written statement setting forth (A) the Fixed Amount; plus (B) the estimated Inventory Price (subject to adjustment pursuant to the Inventory Count, as set out below); plus (C) all Assumed Cure Costs; and less (D) the sum of the Net Deposit Refund Liability Amount.

(c) On the date that is three (3) Business Days prior to the anticipated Closing Date, Sellers shall deliver to Purchaser an estimate of the Acquired Inventory (the “Estimated Inventory Count”) at the Representative Stores along with the DC and the Net Deposit Refund Liability Amount (the “Estimated Net Deposit Refund Liability Amount”). On or before close of business on the third (3^rd) day prior to Closing, Sellers shall cause each of the Acquired Leased Real

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Property to be closed, such that no Inventory shall be sold, or delivered from, any Acquired Leased Real Property. Sellers shall further cause the DC to be closed no later than the close of business on the fourth (4^th) day prior to Closing such that no Inventory shall be sold or delivered from either the DC to any Acquired Leased Real Property or any Excluded Store. During the two (2) calendar days immediately preceding the anticipated Closing Date, Purchaser shall have access to the Representative Stores and the DC solely for the purpose of conducting an Inventory Count. The Inventory Count shall be conducted by Purchaser at Purchaser’s sole cost and expense (for the avoidance of doubt, Sellers may, at Sellers’ expense, designate and have a representative attend and oversee the Inventory Count at each and any Representative Store and the DC) and the final Inventory Count shall be mutually agreed by both Parties acting reasonably and in good faith. The Parties will also conduct a review of the Existing Customer Deposits related to the Reserved Inventory and the value of the Reserved Inventory measured at 100% of the landed cost of the Reserved Inventory, during the two (2) calendar days immediately preceding the anticipated Closing Date (the “Final Net Deposit Refund Liability Amount”).

(d) The Inventory Count at the DC shall be deemed to be the final Inventory Count relative to the Inventory located in the DC. Any difference between the final count of the Acquired Inventory at the Representative Stores and the Estimated Inventory Count at the Representative Stores shall be extrapolated to all Acquired Inventory at all Acquired Leased Real Property locations on a percentage basis for the purpose of determining the Inventory Price with respect to the Acquired Inventory at the Acquired Leased Real Property locations. The Inventory Price shall be adjusted accordingly to give effect to the final Inventory Count of the DC and the final Inventory Count of the Acquired Leased Real Property locations. The Net Deposit Refund Liability Amount shall be adjusted accordingly to give effect to any difference between the Final Net Deposit Refund Liability Amount and Estimated Net Deposit Refund Liability Amount.”

 

iii.

Section 11.1 of the Purchase Agreement is hereby amended to include the following definition:

“Net Deposit Refund Liability Amount” means the Existing Customer Deposits related to the Reserved Inventory less 100% of landed cost value of the Reserved Inventory.”

2. Capitalized Terms. Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Purchase Agreement.

3. Effect of Amendment. This Amendment shall not constitute an amendment or waiver of any provision of the Purchase Agreement not expressly amended or waived herein and shall not be construed as an amendment, waiver or consent to any action that would require an amendment, waiver or consent, except as expressly stated herein. The Purchase Agreement, as amended by this Amendment, is and shall continue to be in full force and effect and is in all respects ratified and confirmed hereby.

 

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4. Miscellaneous. Section 6.9 and Article X of the Purchase Agreement is incorporated herein by reference and shall apply to this Amendment mutatis mutandis as if set forth herein at length.

[The remainder of this page is intentionally blank.]

 

3

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their duly authorized representatives as of date first written above.

 

PURCHASER:
LUMLIQ2, LLC, a Delaware limited liability company
By:		/s/ Jason Delves
		Name:		Jason Delves
		Title:		Chief Executive Officer

FOR PURPOSES OF SECTION 6.9 ONLY:

 

F9 INVESTMENTS, LLC,
a Florida limited liability company
By:		/s/ Avi Cohen
		Name:		Avi Cohen
		Title:		Chief Executive Officer

[Signature Page to First Amendment]

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SELLERS:
LL FLOORING HOLDINGS, INC., a Delaware corporation
By:		/s/ Alice G. Givens
		Name:		Alice G. Givens
		Title:		Chief Legal, Ethics and Compliance Officer
LL FLOORING, INC.
By:		/s/ Alice G. Givens
		Name:		Alice G. Givens
		Title:		Chief Legal, Ethics and Compliance Officer
LUMBER LIQUIDATORS LEASING, LLC
By:		/s/ Alice G. Givens
		Name:		Alice G. Givens
		Title:		Chief Legal, Ethics and Compliance Officer
LL FLOORING SERVICES, LLC
By:		/s/ Alice G. Givens
		Name:		Alice G. Givens
		Title:		Chief Legal, Ethics and Compliance Officer
LUMBER LIQUIDATORS FOREIGN HOLDINGS, LLC
By:		/s/ Alice G. Givens
		Name:		Alice G. Givens
		Title:		Chief Legal, Ethics and Compliance Officer

[Signature Page to First Amendment]

Exhibit 99.1

LL Flooring Completes Sale to F9 Investments

RICHMOND, Va. – October 1, 2024 - LL Flooring Holdings, Inc. (“LL Flooring” or the “Company”) (OTC Pink: LLFLQ), today announced that the Company has completed the previously announced going-concern sale of the business to F9 Investments for the acquisition of 219 stores, inventory in those stores, LL Flooring’s intellectual property and other company assets. LL Flooring also today announced the completion of its previously disclosed private sale of the Sandston distribution center. With the completion of the sale transactions, the court-supervised sale process has concluded.

Charles Tyson, President and Chief Executive Officer of LL Flooring, said, “We are pleased to have reached these value-maximizing sales to preserve the business and maintain ongoing operations. This marks the start of a new chapter for LL Flooring and we are working closely with F9 Investments to ensure a seamless transition for our customers. I would like to express my sincere gratitude to our associates for their hard work and dedication to serving our customers throughout this process.”

LL Flooring continues to work with Hilco Merchant Resources, LLC, to assist the Company in store closing sales at locations that were not part of the agreement with F9 Investments. These locations will continue serving customers through the store closing process. A full list of stores closing can be found on the LL Flooring website at https://www.llflooring.com/store-closings/.

Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal counsel, Houlihan Lokey is serving as financial advisor, and AlixPartners LLP is serving as restructuring advisor to the Company.

Forward Looking Statements

Certain information in this press release may constitute “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, including but not limited to, the asset purchase agreement and the Chapter 11 proceedings and any other statements that refer to our expected, estimated or anticipated future results or that do not relate solely to historical facts. These statements, which may be identified by words such as “may,” “will,” “should,” “expects,” “intends,” “plans,” “anticipates,” “assumes,” “believes,” “thinks,” “estimates,” “seeks,” “predicts,” “could,” “projects,” “targets,” “potential,” “will likely result,” and other similar terms and phrases, are based on the beliefs of the Company’s management, as well as assumptions made by, and information currently available to, the Company’s management as of the date of such statements. These statements are subject to risks and uncertainties, all of which are difficult to predict and many of which are beyond the Company’s control, including, among other things, the following: the outcome of our contingency planning and restructuring activities; settlement discussions or negotiations; the Company’s liquidity, financial performance, cash position and operations; the Company’s strategy; risks and uncertainties associated with Chapter 11 proceedings; the negative impacts on the Company’s businesses as a result of filing for and operating under Chapter 11 protection; the Company’s ability to obtain Bankruptcy Court approval with respect to motions in the Chapter 11 proceedings; the Bankruptcy Court rulings in the Chapter 11 proceedings and the outcome of the proceedings in general; the adequacy of the capital resources of the Company’s businesses and the difficulty in forecasting the liquidity requirements of the operations of the Company’s businesses; the unpredictability of the Company’s financial results while in Chapter 11 proceedings; the Company’s ability to discharge claims in Chapter 11 proceedings; negotiations with the holders of the Company’s indebtedness and its trade creditors and other significant creditors; risks and uncertainties with performing under the terms of any arrangement with lenders or creditors while in Chapter 11 proceedings; the Company’s ability to conduct business as usual; any challenges and risks associated with the Company continuing to operate and manage its business under Chapter 11 protection, including the provision of any transition services to the purchaser and any risks to the Company’s remaining estate; the Company’s ability to continue to serve customers, suppliers and other business partners at the high level of service and performance they have come to expect from the Company; the Company’s ability to continue to pay employees, suppliers and vendors; the ability to control costs during Chapter 11 proceedings; adverse litigation; the risk that the Company’s Chapter 11 cases may be converted to cases under Chapter 7 of the Bankruptcy Code; the Company’s ability to secure operating capital; the

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Company’s ability to take advantage of opportunities to acquire assets with upside potential; the Company’s inability to maintain compliance with financial covenants and operating obligations which would expose us to potential events of default under the Company’s outstanding indebtedness; the Company’s ability to incur additional debt or equity financing for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes; a significant reduction in our short-term or long-term revenues which could cause us to be unable to fund our operations and liquidity needs or repay indebtedness; and supply chain interruptions or difficulties. Therefore, the reader is cautioned not to rely on these forward-looking statements.

The Company specifically disclaims any obligation to update these statements, which speak only as of the dates on which such statements are made, except as may be required under the federal securities laws. For a discussion of other risks and uncertainties that could cause actual results to differ from those contained in the forward-looking statements, see the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2023, and the Company’s other filings with the Securities and Exchange Commission. Such filings are available on the SEC’s website at www.sec.gov and the Company’s Investor Relations website at https://investors.llflooring.com.

Contacts

For media inquiries:

Leigh Parrish / Ed Trissel / Spencer Hoffman

Joele Frank, Wilkinson Brimmer Katcher

212-355-4449

Document and Entity Information	Sep. 30, 2024
Cover [Abstract]
Document Type	8-K
Document Period End Date	Sep. 30, 2024
Entity Registrant Name	LL Flooring Holdings, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-33767
Entity Tax Identification Number	27-1310817
Entity Address Address Line 1	4901 Bakers Mill Lane
Entity Address City Or Town	Richmond
Entity Address State Or Province	VA
Entity Address Postal Zip Code	23230
City Area Code	804
Local Phone Number	463-2000
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Common Stock, $0.001 par value per share
Trading Symbol	LL
Security Exchange Name	NONE
Entity Emerging Growth Company	false
Amendment Flag	false
Entity Central Index Key	0001396033

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