WOODBURY, N.Y. — Long-struggling Jennifer Convertibles filed for Chapter 11 bankruptcy protection Sunday citing a "lack of liquidity," and said it plans to close some stores in a bid to return to profitability.

The Top 100 company, which filed in U.S. Bankruptcy Court for the Southern District of New York, said that prior to the filing, it reached an agreement with its largest creditor, Chinese upholstery producer Haining Mengnu, to keep the flow of goods coming.

Mengnu will continue to supply the retailer and will "convert a large portion of its pre-petition debt into common equity of the company," Jennifer said in a release. Existing stockholders are expected to be wiped out.

In its petition, Jennifer listed assets of about $26 million and debts of $46.4 million. Haining Mengnu is listed with a claim of $16.7 million. Ashley is Jennifer's third largest unsecured creditor with a $1.4 million claim and Klaussner is fifth with a $991,291 claim.

Clint Engel -- Furniture Today, July 19, 2010

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