American Freight said Wednesday it had started closing sales at all of its 328 locations and online.
Hilco Consumer-Retail is managing these sales for American Freight as the latter business winds down operations nationwide.
The issue behind all of this: Earlier this week, Delaware, Ohio-based Franchise Group, Inc. and its affiliates launched voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the District of Delaware.
While other businesses owned by that company — including Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings — remain open, American Freight is being wound down.
“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings to realize their full potential,” Andrew Laurence, Franchise Group’s president and chief executive, said in a release Sunday. “Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”
Franchise Group said it had reached a restructuring understanding with holders of about 80% of its first lien debt.
The company said a lender group had committed $250 million in debtor-in-possession financing which, subject to court approval and with cash on hand, will provide “ample liquidity” to keep remaining businesses operating.
American Freight Furniture and Mattress was established in Lima, Ohio in 1994.
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