Business and Finance

Whitney Design Inc. has filed for Chapter 11 bankruptcy after the Commerce Department imposed special anti-dumping duties on one of the company’s Chinese suppliers.

As the importer, the Hazelwood-based company must pay penalties nearly equal to its annual revenue, forcing it to seek protection from creditors.

Formed in 1994, Whitney imports and sells household goods, mainly ironing boards, pads and covers and closet organizers.

Filing on Saturday, Whitney Design said the Commerce Department imposed a "penalty rate" of 157.68 percent of the purchase price on steel-top ironing boards bought from a Chinese manufacturer since 2004.

The Commerce Department took that step in April after the Chinese supplier, named Since Hardware, failed to cooperate with on certain audits and procedures. Since Hardware is appealing the penalty, according to a filing with the bankruptcy court in St. Louis.

As importer, Whitney will have to pay those special duties even though the company declared it was unaware of the Chinese supplier’s actions.

If the appeal isn’t successful, Whitney could owe up to $35 million. Last year, Whitney’s revenue totaled only $40 million, according to the company.

With such a potential liability hanging over the business, Whitney was forced into bankruptcy, said James L. Glenn, the company’s president and CEO.

"Potentially, (the penalties) could be devastating," he said Monday in an interview. "It’s tough. We didn’t have any idea that this was coming."

The bankrupt company now hopes to sell its assets to a new business, Household Essentials, which will be controlled by Glenn and Whitney’s Chief Financial Officer Mark J. Brown. Both men control Whitney.

Glenn said he anticipated that the sale of Whitney’s assets would be completed early in 2010 and that the company’s 46 full-time employees would keep their jobs.

The sale is backed by Whitney’s two key creditors, Enterprise Bank and Eagle Fund I LP, though the transaction will require the court’s approval, the company said.

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