Parent company of Value City Furniture files for bankruptcy seeking sale
American Signature Inc. has filed for Chapter 11 bankruptcy protection as it seeks to reorganize its business and sell its assets to a stalking-horse bidder.
The nearly 75-year-old, family-owned company, which operates Value City Furniture and American Signature Furniture, expects to enter into a stalking horse asset purchase agreement with ASI Purchaser LLC, an affiliate of its current equity holders. Subject to court approval, ASI Purchaser will acquire substantially all of American Signature’s assets and assume certain related liabilities. American Signature Inc., which operates more than 120 stores, is wholly-owned by Schottenstein Stores Corp.
The filing comes amid a downturn in the real estate market and as consumers have reined in their spending on big purchases. Revenue at furniture and home furnishings stores fell 0.08% in October month over month seasonally adjusted, and were down 1.7% year over year unadjusted, according to the October sales report from the National Retail Federation.
American Signature has between 1,000 and 5,000 creditors with anywhere between just over $500 million and $1 billion in estimated liabilities, according to documents.
“In the face of the ongoing macroeconomic headwinds that have impacted the entire home furnishing industry, the company has carefully evaluated its options to assess the best path forward in the current operating environment,” said Rudy Morando, co-chief restructuring officer for ASI. “Through that review, we determined that entering a court-supervised process will provide the best opportunity to maximize value.”
The company said that select Value City and American Signature stores and websites remain open “at this time” and will continue to fulfill customer orders and provide ongoing customer service “to the best of its ability throughout the court-supervised process.” (Prior to the Chapter 11 filing, certain Value City Furniture and American Signature Furniture stores has closed or commenced store closing sales.)
ASI has secured approximately $50 million in debtor-in-possession financing from Second Avenue Capital Partners LLC. Subject to court approval, this financing will support certain operations and the company’s efforts to maximize value through the Chapter 11 cases and sale process.
Additionally, ASI is filing a number of customary motions seeking, among other things, authorization to continue payment of employee wages and benefits, maintain certain customer programs, and satisfy post-petition obligations to vendors and partners.
Advisors
Pachulski Stang Ziehl & Jones LLP is serving as legal counsel, BRG is serving as financial advisor, SSG Capital Advisors is serving as investment banker, SB360 Capital Partners has been retained to assist with inventory sales, and C Street Advisory Group is serving as strategic communications advisor for the company. Reflect Advisors has been engaged as independent director with Goodwin Procter LLP acting as legal counsel to the independent director.
