Short Seller Sees Lumber Liquidators Holdings Inc. Going Broke

Lumber Liquidators Holdings Inc. LL is headed for bankruptcy in the wake of revelations that its flooring may fails to meet formaldehyde emissions standards, a short-seller said Monday. The company will get swamped by demands that it replace flooring, administer indoor air quality tests and pay medical bills for any customer with disease associated with formaldehyde, according to hedge fund manager Whitney Tilson. The company said Monday that its products are safe for their intended use and meet all environmental standardss. Tilson, short on the company since at least October, http://www.tilsonfunds.com/LL.pdf said the company's $20 million in available cash and its cash flow which he said totaled $57 million as of last year, will be quickly overwhelmed by the demands in the face of skidding sales. "What customer is going to want to buy a product from Lumber Liquidators?" Tilson asked in a note to investors which he emailed to Benzinga. Tilson was quoted in CBS Corp.'s CBS "60 Minutes" Sunday in a report which alleged that laminate flooring produced for the company in China fails to meet state standards in California. In October, Tilson questioned Lumber Liquidators' margin expansion and said it was "due to buying illegal wood." Lumber Liquidators' Virginia offices were raided by federal agents in 2013 seeking evidence the company had illegally imported wood from eastern Russia where the Siberian tiger is endangered. The company denied dealing in illegal wood.