- Bankrupt furniture maker Mitchell Gold Co. has thousands of products — many already paid for by retail customers — tied up at its own and third-party distribution facilities awaiting delivery after the company ran out of cash to fund its operations.
- Ryder Last Mile is holding over 2,000 Mitchell Gold products in its warehouses, according to a Monday filing. The goods are awaiting distribution to 600 end-customers as the third-party logistics provider waits for payment on delivery and storage charges.
- Another logistics provider, Furniture USA Distribution, said it is holding over 1,300 of the bankrupt company’s products. In all, Mitchell Gold Co. estimated it had $6.5 million worth of merchandise stuck at third-party facilities awaiting delivery and another $17 million at its own facilities, according to a mid-September filing.
Mitchell Gold Co. — which sells under the Mitchell Gold + Bob Williams brand, both through its own channels and to retailers such as RH — shut down suddenly late last month. The company’s chief restructuring officer blamed its cash shortfalls on the “restrictive lending tactics” of a lender.
Since then, much of the furniture company’s supply chain has frozen up, throwing into limbo many sales that customers have already paid for.
Ryder’s filing illustrates the core problem. As Ryder explained, its 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 Mitchell Gold Co.’s finances locked up in the middle of that process. Two customers of Mitchell Gold + Bob Williams, for example, had ordered and paid for the company’s products in February but are still waiting for delivery, according to a letter filed with the court.
“To our shock and dismay, we were told that [Mitchell Gold Co.] had filed for bankruptcy and Ryder could not release the items to us or schedule delivery,” the customers said.
Ryder says that it possesses senior liens on the Mitchell Gold merchandise in its facilities and that it must be paid before delivering. The 3PL estimates it is awaiting $200,000 in delivery costs for all the Mitchell Gold Co. merchandise it holds.
At the same time, Ryder is charging Mitchell Gold Co. $4,140 a day in storage costs as it awaits payment from the bankrupt furniture supplier — costs that have accrued to more than $80,000 since Mitchell Gold filed for Chapter 11 late this summer.
In addition to the undelivered furniture, Ryder says that Mitchell Gold owes it $1 million for other unpaid charges on past delivery and storage services.
Similarly, Furniture USA says that the cost of delivery for the Mitchell Gold products it is storing amounts to nearly $265,700, and is charging more than $5,300 a day for storage while it awaits payment.
Mitchell Gold’s retail customers who filed the letter are not alone. Mitchell Gold said in mid-September that “many” customers had contacted it having said that they had reached out to third-party delivery providers who were “unwilling to arrange delivery.”
Additionally, a wholesale customer, the retailer Jenni Kayne, paid for products that it returned to Mitchell Gold for adjustments and that are now stuck in a supply chain no man’s land because of the company’s liquidity crisis.
To cope with the undelivered orders, Mitchell Gold has asked the bankruptcy court overseeing its case to allow customers to retrieve merchandise they have paid for and pay for shipping costs themselves.
Ryder and Furniture USA both objected to the request. Ryder argued that the plan didn’t account for storage costs owed to it and that “only a portion” of customers will retrieve their order merchandise, meaning logistics companies would be stuck with the products.
A hearing on Mitchell Gold’s court request is set for Oct. 2.