Dive Brief:
- Furniture company American Signature Inc., which is wholly owned by Schottenstein Stores Corp., filed for Chapter 11 bankruptcy relief in the U.S. Bankruptcy Court for the District of Delaware, per a Sunday press release. The company operates Value City Furniture and American Signature Furniture, and cited “one of the most severe housing market declines in recent history” as a core reason for decreased sales, per a bankruptcy declaration from co-Chief Restructuring Officer Rudolph Morando.
- American Signature Inc. — which operates over 120 stores and employs about 3,000 people — commenced liquidation sales prior to filing, which will be followed by the closure of 33 stores. The 75-year-old company saw net sales drop nearly $150 million from 2024 to 2025, and its net operating loss increased by $52 million in that same time, per the declaration.
- American Signature Inc. expects to enter into a stalking horse asset purchase agreement with an affiliate of its current equity holders. Accordingly, the company says it requires “debtor-in-possession financing and use of Cash Collateral to fund their proposed sale process” as it has limited liquidity to sustain operations.
Dive Insight:
American Signature Inc. saw sales increase 37% in 2021, but that growth is long gone.
The COVID-19 pandemic brought on economic stimulus programs and lockdowns that the furniture retailer says pushed consumers to invest in their home spaces.
“Although the Company experienced a period of opportunistic growth during COVID, like many peers in the industry, it has since faced significantly decreased sales volume over the past year, resulting from one of the most severe housing market declines in recent history, alongside other macroeconomic factors and heightened cost pressures due to rising inflation, elevated interest rates, newly established tariffs, and a post-pandemic slowdown in consumer demand for furniture,” Morando said in the declaration.
The company tried to resolve its woes with financing prior to the bankruptcy filing, though it proved unsuccessful.
Equity holders provided unsecured loans of about $51 million in the two years preceding the voluntary bankruptcy petition that was filed Saturday, about $24 million of which remains outstanding. In addition, an affiliate of the company entered into an ABL facility in December 2024 for about $50 million in additional liquidity.
The furntiure company has between 1,000 and 5,000 creditors with anywhere between just over $500 million and $1 billion in estimated liabilities, per the petition.
Among some of the company’s largest unsecured creditors are Sealy Mattress Manufacturing, Tempur-Pedic North America and Ashley Holdings FL.
Several parties involved in the bankruptcy case are affiliates of the Schottenstein family “who indirectly own the Debtors, through various trusts,” per the declaration. The Schottenstein family is an industry powerhouse, having connections to several major retailers. Jay Schottenstein serves as CEO and executive chairman for American Eagle as well as executive chairman of Designer Shoe Warehouse owner Designer Brands.