June 20, 2023
Deco Lighting: Server Shut Down & Doors Locked
If this is the end, Signify and other lighting companies “will almost assuredly” not receive any monies due to them
In a Monday court filing, Raymond Aver, the bankruptcy attorney representing bankrupt debtor Deco Lighting, filed an application and declaration with the court describing that, "on the evening of June 15, 2023, the Debtor's president had the company's computer server shut down and its business premises locked." Court records indicate Babak Sinai, brother of Sam Sinai, as the president of Deco Lighting.
The hearing for Signify's Motion to Convert, Dismiss, or Appoint a Chapter 11 Trustee to the case took place at 2:00pm PDT that same Thursday. That might have triggered the actions described by Aver. The court approved Signify's motion during the hearing but with an effective date of July 31. This decision allows the involved parties a 45-day period to potentially reach a court-approved agreement. Signify is claiming an unpaid debt of $222,288 from Deco Lighting, a claim that Deco Lighting has not challenged in court.
The Deco Lighting website cites a 7:00am PT open time. Our phone call to them at 7:09am today rang and rang unanswered for over 60 seconds. No automated attendant or human picked up our call. It was our second such attempt of the day that went unanswered. The first attempt was at 4:40am to see if an automated attendant was active.
PQL withdraws from mediation
Aver's filing also mentions that Deco Lighting's investor, Premium Quality Lighting (PQL), showed no further interest in mediation that could have possibly led to a fresh agreement to help Deco Lighting evade liquidation.
It was only two years ago that PQL and Deco Lighting announced a strategic alliance, which Deco Lighting touted as a partnership that offers "the most comprehensive and innovative lighting solutions platform." Inside.lighting refrained from publishing that press release due to suspected exaggerations and falsehoods, but another industry publication published the Deco Lighting press release verbatim as headline news. Today, the self-proclaimed "most complete and innovative lighting solutions platform" appears to be faltering.
Emergency conference requested
In his court filing, Aver requests the court to issue an emergency order for a status conference without detailing the specific goals of such a conference. If no action is taken before July 31, it would presumably trigger the transition from Deco Lighting's Chapter 11 bankruptcy (allowing operation and restructuring) to a Chapter 7 status, initiating a U.S. Trustee supervised liquidation process to repay creditors. Aver's plea for an emergency hearing may alter the course of events.
Signify, Acuity Brands and numerous lighting agents await payments
Deco Lighting owes approximately $4 million to ABS Capitol and $560,341 to Crossroads Funding. These secured creditors take precedence over unsecured creditors such as Signify, Acuity Brands, Osram Sylvania, and numerous lighting agents awaiting payment for past sales revenues generated for Deco Lighting. Deco Lighting stated in April that "unsecured creditors will almost assuredly" not receive any further payments if the case is converted to Chapter 7.
Crossroads' entire amount is due since Deco Lighting discontinued its monthly payments in 2022, a claim that Deco Lighting did not dispute. As a secured creditor, Crossroads ranks high on the priority list for payment.
The original Crossroads loan and security agreement, backed by personal guarantees from Deco Lighting officers Sam Sinai and Babak Sinai, featured an annual rate equivalent to 14.98%. If Crossroads does not receive full payment from Deco Lighting or its estate, the Sinai brothers will be liable for the repayment. According to the loan agreement, each passing month of non-payment increases Crossroads' interest by over $6,500, plus a late fee of 5% of the total due.
