This sound is generated automatically. Let us know if you have any feedback.
Dive Brief:
- The bankrupt Mitchell Gold Co. furniture company. has thousands of products—many already paid for by retail customers—tied up at its own distribution facilities and at third parties awaiting delivery after the company ran out of cash to finance its operations.
- Ryder Last Mile holds over 2,000 Mitchell Gold products in its warehouses, according to Monday’s filing. The goods await distribution to 600 end customers as the third party logistics provider awaits payment for delivery and storage charges.
- Another logistics provider, Furniture USA Distribution, said it is which holds over 1,300 of the products of the bankrupt company. Overall, Mitchell Gold Co. he estimated that he had $6.5 million worth of merchandise is stuck in third-party facilities awaiting delivery and another $17 million in its own facilities, according to a mid-September filing.
Dive Insight:
Mitchell Gold Co. — which sells under the Mitchell Gold + Bob Williams brand, both through its own channels and retailers such as RH — closed suddenly at the end of last month. The company’s chief restructuring officer blamed its cash shortages on a lender’s “restrictive lending tactics”.
Since then, much of the furniture company’s supply chain has been frozen, stalling many sales that customers have already paid for.
Ryder’s testimony illustrates the basic problem. As Ryder explained, storage and delivery charges are typically paid by the end customer to the original cargo owner, in this case Mitchell Gold Co., and the payments are then forwarded to Ryder.
But the finances of Mitchell Gold Co. they closed in the middle of this process. Two customers of Mitchell Gold + Bob Williams, for example, had ordered and paid for the company’s products in February but are still awaiting delivery, according to a letter filed in court.
“To our shock and dismay, they told us this [Mitchell Gold Co.] had filed for bankruptcy and Ryder could not release the items to us or schedule delivery,” the customers said.
Ryder says it has superior rights to the Mitchell Gold goods at its premises and that it must be paid for before delivery. 3PL estimates that it expects $200,000 in delivery costs for all of Mitchell Gold Co.’s merchandise. which he owns.
At the same time, Ryder charges Mitchell Gold Co. $4,140 a day in storage costs as it awaits payment from the bankrupt furniture supplier — costs that have accumulated to more than $80,000 since Mitchell Gold filed for Chapter 11 in late summer.
In addition to the undelivered furniture, Ryder says Mitchell Gold owes her $1 million for other unpaid fees on past delivery and storage services.
Similarly, Furniture USA says delivery costs for the Mitchell Gold products it stores are nearly $265,700, and it charges more than $5,300 a day for storage while it awaits payment.
Mitchell Gold’s retail customers who submitted the letter are not alone. Mitchell Gold said in mid-September that “many” customers had contacted it saying they had contacted third-party delivery providers who were “unwilling to arrange delivery”.
In addition, a wholesale customer, retailer Jenni Kayne, paid for products returned to Mitchell Gold for adjustments that are now stuck in a supply chain due to the company’s liquidity crisis.
To deal with the undelivered orders, Mitchell Gold asked the bankruptcy court overseeing its case to allow customers to reclaim the merchandise they paid for and pay the shipping costs themselves.
Ryder and Furniture USA both opposed the request. Ryder argued that the plan did not take into account the storage costs owed to him and that “only a fraction” of customers would retrieve the goods they ordered, meaning logistics companies would be stuck with the products.
An audition on Mitchell Gold’s court request is set for Oct. 2.