July 10, 2024   

Nevada Lighting Maker Files for Chapter 11 Bankruptcy

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Above:  Varaluz Scribble 6-Light Pendant | Photo credit: Varaluz, LLC

Varaluz seeks Chapter 11 amid revenue loss; $3 million debt includes $300+K owed to 31 lighting agents


Varaluz, a Nevada-based lighting manufacturer and distributor, has filed for Chapter 11 bankruptcy. The company, which specializes in producing decorative lighting fixtures, made the legal filing on June 25, 2024, in the United States Bankruptcy Court for the District of Nevada. Despite these challenges, the company continues to operate and restructure with one sales agent informing us that Valaruz is still shipping orders.

The bankruptcy filing reveals that Varaluz, has assets totaling $2.8 million and liabilities amounting to just under $3.0 million. Despite these financial challenges, Ron Henderson, President and 80% majority owner of the company, emphasized their intention to restructure the debt while continuing operations. "We filed Chapter 11 to restructure debt and continue to operate and pay back our genuine debts. Especially back commissions to our sales representatives who made us who we are," Henderson stated.


Financial Breakdown and Liabilities

Varaluz, LLC's assets include $1.4 million in lighting inventory and $760,269 in accounts receivable. The company’s largest unsecured creditor, VPI/La Forge Lighting and Furniture of the Phillipines, is owed $545,028 for manufacturing services. Other significant unsecured creditors include several lighting sales representatives: Light Inc., Southern California ($41,816), Tennessee Lighting Sales and Langlais Sales in New England, with 31 sales agents collectively owed over $300,000.

In terms of operational assets, Varaluz maintains leases for showrooms located in Las Vegas, Dallas, and High Point, North Carolina. These include the World Market Center Las Vegas Showroom, High Point Showroom, and a showroom in the Dallas Market Center. Bankruptcy filings indicate that tens of thousands in lease fees are owed to both International Market Centers and Dallas Market Center.


Legal and Financial Challenges

The company has faced a recent decline in revenue, with gross earnings dropping from $8 million in 2022 to $6.9 million in 2023. This financial strain has been exacerbated by several legal actions from creditors related to breaches of contract, primarily concerning merchant cash advance agreements. The bankruptcy filing lists five open breach of contract lawsuits, including cases brought by Merged Funding Group, Square Funding Cali, and Kalamata Capital Group.

Additionally, the company’s obligations extend to the American Lighting Association, which is owed $4,000 in trade association fees.


Intention to Restructure

Varaluz, LLC aims to use the Chapter 11 filing to restructure its debts and stabilize its financial footing while continuing its operations. The restructuring plan is expected to focus on addressing the claims of creditors and ensuring the company can fulfill its obligations, particularly to its sales representatives and other key stakeholders.

The company’s management remains hopeful that through effective restructuring, Varaluz can overcome its current financial difficulties and continue to provide innovative lighting solutions to its customers.