WASHINGTON — LoveSac Corp., the Salt Lake-based furniture company founded by the winner of Richard Branson's "Rebel Billionaire" TV show, has exited bankruptcy protection.
The company, which makes "oversize" stuffed furniture, similar to bean bags, filed for bankruptcy protection in January. It emerged Thursday from Chapter 11 after selling its assets to the private investors that control the company.
SAC Acquisition, an investment vehicle controlled by the company's preferred shareholders, agreed to pay $600,000 in cash for the company. The SAC Acquisition group includes Walnut Investment Partners LP, Walnut Private Equity Fund LP, Brand Equity Ventures II LP, Hauser 41 LLC and Millevere Holdings Ltd.
SAC also will contribute $150,000 to a liquidation trust for settlement of potential litigation and 1 percent, or at least $150,000, of the gross receipts of LoveSac for the next year and a half.
LoveSac's exit from bankruptcy was stalled by a dispute with McLean, Va., lender G&G LLC, which had loaned the company $2.8 million.
G&G sued a group of company insiders, including founder Shawn Nelson, for allegedly engaging in a complicated shell game that stripped it of its equity stake.
In 1995, the 18-year-old Nelson founded LoveSac in his parents' basement. Nelson, whose Web site describes him as "the next generation CEO" and "the man with the SAC," won Virgin Group founder Branson's reality show in January 2005.
LoveSac, dragged down by overexpansion and a heavy debt load, filed for Chapter 11 protection in Wilmington in January.
The company listed assets of $11.5 million and debts of $14.5 million.
At the time of its filing, the company had 78 stores and about 400 employees. LoveSac listed 20 retail stores in the United States and Australia on its Web site on Monday.