A year ago Nelson came away with $1 million from billionaire Richard Branson, the owner of Virgin Atlantic Airways, after winning Fox TV's reality show "The Rebel Billionaire." Nelson said he handed his winnings over to his chief financial officer to further grow the company.

In October, Nelson said LoveSac's 2005 sales would top $30 million. LoveSac operates 74 stores, including six locations in Utah, and has roughly 700 employees.

Less than four months ago, LoveSac was named the winner of the Utah 100 awards, a ranking of the state's fastest revenue growth companies.

Devin Thorpe, founder of Thorpe Capital, a Salt Lake-based investment bank, said fast-growing companies always need more capital.

"We know that LoveSac opened dozens of stores in the last year," Thorpe said. "As Utah's fastest-growing company for the years 2000 through 2004 they raised a lot of money; much of that, however, was structured as debt."

Also this week, a bankruptcy judge ordered a consolidation into one case of three of LoveSac Corp.'s affiliates, which also filed for bankruptcy protection.

Those affiliates include LoveSac of Nevada LLC, ChillSack LLC and LoveSac Franchising Inc.

According to the American Bankruptcy Institute, Chapter 11 is available for both business and consumer debtors. The provision allows a debtor to remain in possession of a business and in control of operations while a court-approved reorganization plan is finalized.

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E-mail: danderton@desnews.com