MERRILLVILLE, Ind. — Z Gallerie, the Los Angeles-based contemporary furniture retailer, has filed for Chapter 11, citing liabilities between $50 million and $100 million.
The retailer, which is owned by CSC Generation Holdings Inc. and does business as part of DirectBuy Home Improvement Inc., filed for protection in the U.S. Bankruptcy Court in the District of New Jersey. According to the filing, which was reported on Bankruptcycompanynews.com, ZGallerie has 21 locations in nine states.
CSC bought DirectBuy/Z Gallerie out of bankruptcy in July 2019 for $20.3 million.
In the filing, according to the report, Robert Fetterman, chief financial officer and interim CEO, said the debtor planned to retain Stump & Co. as its investment banker to market the debtor’s assets.
“Additionally, the debtor also intends to file a motion proposing an efficient, public and flexible auction process in connection with its sales efforts. If the debtor is unable to implement a going-concern transaction, the debtor will turn to an orderly liquidation of its remaining assets, close its stores in the coming months.
“In addition to marketing a going concern transaction, the debtor will also be simultaneously initiating ‘soft’ sales in its retail locations to monetize its inventory.”
Fetterman’s declaration stated that the company’s problems stemmed from “severe liquidity constraints brought on by a confluence of underperforming retail stores, adverse macroeconomic trends and industry specific headwinds,” including the impact of COVID-19, supply chain issues that impacted profitability and economic conditions such as higher interest rates, inflationary pressure and mortgage rates that impacting the housing market.
The filing noted that Z Gallerie is getting up $1.1 million of no-interest, debtor-in-possession financing through ZG Lending SPV LLC, which is a CSC affiliate.
See also: DirectBuy acquires Z Gallerie