An American retail group has filed for Chapter 11 bankruptcy protection on November 3, 2024, in the U.S. Bankruptcy Court for the District of Delaware.
As part of its restructuring plan, Franchie Group, which is the parent company of Top 100 retailer American Freight and Buddy's Home Furnishings, announced the winding down of American Freight, with store closing sales set to begin on November 5. The decision comes as the brand has struggled with ongoing inflation and macroeconomic challenges impacting the durable goods sector.
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FRG's Chapter 11 filing follows a restructuring support agreement with holders of approximately 80% of its first lien debt. This agreement includes $250 million in debtor-in-possession financing, which, along with cash reserves, will provide liquidity to continue operations at its remaining businesses—Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings. These brands will continue to operate as usual during the bankruptcy process.
Andrew Laurence, FRG's CEO, stated that the restructuring is a key step to strengthening the company's balance sheet, enabling its core businesses to thrive. However, the closure of American Freight marks a significant shift, as the retailer has faced difficulties since FRG acquired it in 2019, including the integration of former Sears Outlet stores.
In addition to American Freight, FRG's portfolio has faced challenges with its other acquisitions, including Badcock Home Furniture &more, which it sold to Conn's HomePlus in 2023. Franchise Group's financial troubles were compounded by losses from B. Riley Financial, which had backed the company's management-led acquisition last year, and controversies surrounding former CEO Brian Kahn, who resigned earlier in 2024.
FRG's estimated assets and liabilities range between $1 billion to $10 billion, with between 50,000 to 100,000 creditors involved in the proceedings.
Source: www.furnituretoday.com