FRANKLIN COUNTY, Va. – A Franklin County furniture store filed for bankruptcy this week, leaving hundreds of churches and businesses across the country out millions of dollars.
As 10 News has reported, Church Furniture Store closed its doors unexpectedly earlier this month. According to the Chapter 7 bankruptcy petition filed by the attorneys of the Rakes Group, there are more than 300 creditors out there made up of churches and businesses, waiting on refunds they fear may never come.
A "For Sale" sign now sits in front of the 28-year-old Rocky Mount business that sold furniture to churches across the country. Up until a year ago, orders were filled and the business had good online customer reviews and ratings, but now, according to new bankruptcy documents obtained by 10 News, 150 churches are owed thousands of dollars and the business is permanently closed.
According to the petition for bankruptcy, there are more than 320 creditors, including 150 church congregations across 31 states and three countries. In total, more than $3.4 million is owed.
Most of the churches listed as creditors are from Virginia. Twenty-five Virginia churches are listed from across the state, including three congregations in Roanoke, three in Martinsville, two in Richmond and one each in Blacksburg, Covington, Salem, Bassett, Ridgeway and South Boston. Other churches in Virginia include those located in Onancock, Middletown, Yorktown, Stafford, Spencer, Haymarket, Beaverdam, Fredericksburg, Midlothian, Stony Creek and Crewe.
The list of those owed money from the Rakes Group also includes employees who went unpaid, like the man who spoke to 10 News anonymously over the phone. He's out more than $1,800. Other employees are listed, as well.
Beverly Walters, of Lily of the Valley Church in Anahuac, Texas first contacted 10 News about her church's situation.
“It hurts me that I'm having to fight for something that we paid for that I allowed them to take out of our bank account,” Walters said. Walters' church is owed the most of all congregations listed at over $17,000.
Lily of the Valley Church was destroyed by Hurricane Harvey. The money the church used to purchase furniture from Church Furniture Store was given to them by Samaritans Purse to rebuild.
Even the former owner of the church furniture store who originally sold his business to Rakes is listed, now owed nearly $2 million.
Creditors fear it's money they will never get back.
The Rakes Group’s attorney, Stephen Dunn, responded Wednesday on behalf of his client.
“The Rakes Group Inc. as a result in a downturn in business and increase in operating cost found itself in the position of not being able to fulfill orders due to the mounting debt incurred during the slowdown in church furniture sales in the past several years. As a result, all operations have ceased and a Chapter 7 liquidation bankruptcy was filed. The Chapter 7 Trustee will be responsible for securing the assets and liquidating them in order to pay toward any claims that are filed.”
Andy Goldstein, managing partner of Magee Goldstein Lasky & Sayers, P.C. in Roanoke is an expert in bankruptcy. He is unaffiliated with this case but explained what Chapter 7 bankruptcy means.
“It's essentially a liquidation bankruptcy. So that's a company that has basically decided that it's not going to remain in business, it's not able to pay all of its debts,” Goldstein said.
Goldstein said those creditors in the Rakes case should contact the accounts trustee. He said in cases like this, most of the decisions on where money will go after the liquidation will be left up to the trustee. In this case, according to online court records, Steven Higgs in Roanoke has been appointed the trustee.
Generally speaking, Goldstein says for those owed money, Chapter 7 is not a favorable outcome.
“Generally, Chapter 7 is not good news for a creditor. It's not common that the results of the Chapter 7 is to give a particularly large distribution to the unsecured creditors. It does happen, but it's not the general case,” Goldstein said.
The trustee can be contacted here:
Steven L. Higgs, P.C.
9 Franklin Road SW
Roanoke, VA 24011-2403
540-400-7990
trustee@higgslawfirm.com, admin@higgslawfirm.com