PeopLoungers will close its plant in Nettleton, idling 175 workers and transferring production to a smaller facility in Mantachie by the end of the year.

The move was announced Wednesday by Armand Carrano, the senior managing director of Charlotte, N.C.-based The Finley Group, who has been managing PeopLoungers as chief restructuring officer.

Carrano said PeopLoungers will close its 430,000-square-foot plant in Nettleton and move to its 175,000-square-foot facility in Mantachie to help cut costs. The company will reopen in January.

The Nettleton facility will be put up for sale.

“We’re very much going to be a leaner company coming out of this,” he said.

In another cost-cutting move, PeopLoungers will close its High Point, N.C., showroom. It will keep its Tupelo showroom, but will use less space, Carrano said.

“We’re going to use some of the remaining space for office functions, about 20-25 people, and we’ll also keep the showroom open year-round,” Carrano said.

The company will focus on its core business — upholstered motion furniture such as sofas, loveseats and chairs. Motion furniture include items such as recliners, sleepers and items that recline, swivel and massage.

The company still has about 175 employees, all of whom will be offered their same positions with the “new” company. At its peak in the late 1990s, the company had some 750 employees.

Carrano said the company’s 800 customers have been kept informed of the changes and have reacted “positively” to the news of the impending sale, which must be approved by the U.S. Bankruptcy Court in Mississippi.

New York-based Capital Business Credit, which has been the primary lender for the upholstered motion furniture company, said its newly formed PeopLoungers LLC is the “stalking horse” bidder for PeopLoungers Inc., which is in Chapter 11 bankruptcy protection. The term “stalking horse” refers to the company that makes the initial bid. Chosen by the bankrupt company, the stalking horse sets the standard for other bidders.

Chapter 11, the most common form of bankruptcy, frees a company from the threat of creditors’ lawsuits while it organizes its finances. Debtor’s reorganization plan must be accepted by a majority of its creditors. Unless the court rules otherwise, the debtor remains in control of the business and its assets.

Carrano said the stalking horse bid of $6.5 million likely will not be matched by any other offer.

“We see a lot of value in keeping the PeopLoungers name,” Carrano said. “We haven’t talked to anyone else, but anything can happen.”

With a tighter focus, the company seeks to post about $25 million in sales the first year, he said.

When PeopLoungers filed for Chapter 11, the company said it owed its top 20 creditors some $5.7 million. It also said sales dropped from about $94 million in 2003 to about $50 million.

“PeopLoungers will continue to operate. We’re saving close to 200 jobs and hopefully, this will be a fruitful endeavor,” Carrano said.