Broken Furniture: Co-Founder Recounts How MG+BW Went Down

Bob Williams, left, and Mitchell Gold are the co-founders of the upscale furniture company Mitchell Gold + Bob Williams. (Provided)

How did you go bankrupt?

Mitchell Gold, co-founder of Mitchell Gold + Bob Williams, the upscale furniture company, quotes Mike Campbell, a character in Hemingway’s “The Sun Also Rises.”

“Two ways. Gradually, then suddenly.”

Gold said MG+BW’s collapse after 34 years of success and brand-building was a sharp “punch in the gut,” and in his view largely a result of problems tied to PNC Bank and the private equity company that owned MG+BW, the Stephens Group LLC of Little Rock.

The Stephens Group, led by W.R. “Witt” Stephens Jr. and his sister, Elizabeth Stephens Campbell, confirmed on Aug. 29 that the luxury furniture company was shutting down.

“This has been so shocking, and it happened so fast, and in my opinion irresponsibly,” Gold said in a telephone interview last month. “My coping mechanism is to recognize and be very appreciative of the good things I’ve had in my life. I’m sitting at home on the lake with a beautiful view. But this has been devastating. The one word I keep coming back to is heartbroken. This company was our baby.”

The Stephens Group did not respond to several requests for comment for this article. But it said in a statement that, “Throughout our history, we have been able to help many companies unlock their value and succeed in the marketplace. While we do everything we can to support our portfolio companies, how their stories play out are not always fully within our control.”

Mitchell Gold + Bob Williams, born in 1989 and based in Taylorsville, North Carolina, ran manufacturing operations and had more than 25 retail stores across the country. It also had about 800 employees.

North Carolina workers found notices dated Aug. 26 at factory gates saying the company had “recently and unexpectedly learned we are unable to continue business operations.”

Bloomberg Law reported on Aug. 31 that the Stephens Group put the holding company for Mitchell Gold + Bob Williams, SG-TMGC, into Chapter 11 bankruptcy. It owed from $10 million to $50 million, according to Delaware court papers.

The Stephens Group recently invested $20 million to try to restructure the company, but Gold told Arkansas Business MG+BW’s lender, PNC Bank, refused to let it disburse money to vendors or even fund its payroll. “Eventually the bank purposely found a reason to find the company in default at the end of July, and by the end of August the company couldn’t fund through the bank and Stephens put it into bankruptcy.”

Gold, who is 72, believes PNC seized on a “technicality” to freeze the money. “It’s my understanding that a report was submitted on the wrong form, and that it was a couple of days late,” Gold said in a telephone interview. “In normal banking relationships, if something like that happens, the bank relationship manager would simply call and say, ‘Hey, you needed to do this on the other form, not this form, and that it’s a couple of days late.’

“The other side would say, ‘Oh, my goodness, let us correct it and send it back right away,’” Gold said. “But you wouldn’t put a company in default.”

That was the sudden part of MG+BW’s demise.

A New CEO

The gradual part began in 2019, when Gold stepped down as CEO. At that point, he had worked well with the Stephens Group for five years. But a couple of key employees departed, and the Stephens Group wanted a new CEO in place before filling those positions, Gold said.

Then when the COVID pandemic struck in the spring of 2020, it took a heavy toll on just about all businesses, and MG+BW found itself overstocked after aggressive purchasing due to supply chain issues and some missteps on clearing out obsolete merchandise.

Gold said that, in retrospect, the company also shut down furniture production probably too fast, failing to anticipate that wealthy city dwellers would buy remote homes and need to furnish them quickly.

“We had lived through 9/11 and through the 2008 financial crisis, but as Gilda Radner would say, it’s always something, right?”

A new CEO, Allison O’Connor, was running the company, and the Stephens Group had control of the board and its chair, Gold said. “The company got into some deep trouble,” he said. “It was hard to steer through COVID and the post-COVID world, even though our sales volume stayed very good. There were supply chain issues.”

In previous crunches, good relationships with vendors saw the company through, Gold said.

In the 2008 financial crisis, vendors gave MG+BW an extension to pay. “When I had to go to the bank and redo our terms of our loan because of the crisis, they were cooperative.”

When mad cow disease struck in Europe in the 1990s, portending a leather shortage, Gold said, he asked vendors to sell him as much leather as he could get, right away, without raising prices. “That was a big deal; we make a lot of leather furniture. And they did that for me before prices rose for everybody and leather became scarce. That convinced me of the importance of vendor relations. After I left [as CEO], those relationships changed to more of an adversarial situation, I’ve been told by vendors.”

That hurt MG+BW during the supply chain crunch after the pandemic, he said.

By early this year, “the business was in such financial trouble that the CEO [O’Connor] resigned,” Gold said. The Stephens Group “was very helpful” in finding an interim CEO, Chris Moye, Gold said, adding that he got back into the business to aid the turnaround.

But Gold said he found that the PNC relationship had soured. “Banks don’t like it when you want to expand your credit line when business is bad,” he said. “They’re more likely to be willing when you’re doing well and wanting to open more stores or add capacity. But Page 1 in the manual is you have to get along with the banker. You can’t get into a snarky disagreement.”

In a Worker Adjustment & Retraining Notification Act letter to alert workers to their pending unemployment, Moye wrote that the company had “recently and unexpectedly learned that we are unable to secure critical financing to continue business operations.”

A PNC Bank representative said it does not comment on individual accounts or issues. But Fayetteville bankruptcy attorney Stanley Bond said banks often have a right to freeze accounts from borrowers. That’s why he urges clients to keep their business accounts separate from their lenders. “Your banker is not your friend,” he said.

‘Wonderful Things’

It was a sad ending for a company Gold saw as a jewel of the furniture business. “We wanted to treat customers better and treat our employees better,” he said. “We started making upholstered chairs and eclectic tables. Then it expanded to a full line of home furnishings with sofas, chairs, dining tables, bedroom furniture, pretty much everything.

“We built a really incredible business. We had the first on-site child-care center at a furniture factory anywhere in the country. We had an on-site medical clinic, offered mammograms one week a year on-site for our female employees at no charge, and had a college scholarship program for our employees’ children. I think we had some wonderful things.”

But after Gold’s retirement as CEO and Williams’ a year later, the founders were “no longer in charge of the company,” said Gold, who lives in Conover, North Carolina.

He wouldn’t directly answer questions on whether he thought the Stephens Group had owned up to its role in the company’s demise, citing a non-disparagement clause.

In a statement, the Stephens Group said it had worked closely with Mitchell Gold + Bob Williams as it released new collections, collaborated with designers and built “unique pieces that are used with love in homes all across the world.”

“The Stephens Group knows that [Mitchell Gold + Bob Williams] has done the best it could in a very challenging situation and empathizes with all those who are impacted,” the Stephens Group statement said.

Gold said that he’s working with advisers to rescue the company. “We don’t want this brand to die, and I’m very disappointed frankly that Stephens let it die.”

Some lessons came out of the pain, he said.

“If you’re not getting along with your banker, you have to find out why; and if you have an employee coming back and griping about the banker, maybe someone else should get involved to find out if everything is accurate as it’s being portrayed,” Gold said.

“And frankly, the other thing I’ve learned is that people have to take responsibility for their mistakes. There were mistakes and I don’t think responsibility was taken. This company should never have gone into Chapter 11.”