💥New Chapter 11 Bankruptcy Filing - American Signature Inc.💥
Discount furniture store is a conflicts mess, will likely stay in the family all the same
On November 22, 2025, Ohio-based American Signature Inc. and eight affiliates (collectively, the “debtors”) filed chapter 11 bankruptcy cases in the District of Delaware (Judge Stickles). The debtors, which operate across their Value City Furniture (“VCF”) and American Signature Furniture (“ASF”) brands, have ~3k employees servicing more than 120 stores across 17 states,* of which presumably a handful are in charge of this 👇 kick-a$$ and consternation-inducing social media account, lol:
We sure hope the buyer — which is, and let’s be honest, can only be, an affiliate of the debtors’ current equity owner, Schottenstein Stores Corporation — keeps the social media person on staff because the content is …
The fall of the debtors’ business on the other hand is …
Don’t take our word for it: here is Berkeley Research Group’s (“BRG”) co-CRO Rudolph Morando — yes, “co”,** because, 😉, this dumpster fire is so dumpster firey that the debtors needed more than two hands on deck to tell the sordid tale:
“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. These macroeconomic headwinds, combined with operational challenges across the business, have impacted the Company’s ability to execute and drive top- and bottom-line performance.”
So how about that top- and bottom-line performance, eh? Buckle up, b*tches: for the ‘23, ‘24, and ‘25 fiscal years, the debtors had total sales of approximately $1.1b, $950mm, and $803mm, respectively. For those same fiscal years, the debtors had net operating losses of …
… $18mm, $18mm and $70mm, respectively. Throw that operating performance against (a) $93mm of funded debt split between a $39mm prepetition ABL (entered into in December ‘24) and a $54mm prepetition term loan annnnnd (b) $236mm in unsecured claims*** and (c) sprinkle in the fact that, as of the petition date, the debtors had only $1.9mm of cash on hand and (d) 😬.****
Cue the bankruptcy — but only after the debtors attempted but failed to adequately cut costs (including by commencing closure of 33 stores prepetition and commencing liquidation sales) in a last ditch effort to stay alive.
But, hold up. All of that is, shall we say, mildly interesting, sure, but not terribly original. What spices things up a bit, though, is the fact that there are potential “conflicts” all over the damn place with this thing.
Enter Reflect Advisors LLC’s Adam Zalev as independent director and sole member of the debtors’ “conflicts committee” because holy hell is one needed here. Enter also Goodwin & Procter LLP (Kizzy Jarashow, Stacy Dasaro) as the committee’s counsel because holy hell will they be needed here. “The Conflicts Committee was constituted in order to, among other things, avoid any potential conflict of interest as a result of the relationship between the Debtors and its affiliated transaction counterparties. Several parties involved in these Chapter 11 Cases are affiliates of the Schottenstein family who indirectly own the Debtors, through various trusts….,” said Mr. Morando, putting things mildly (emphasis ours). Several … parties? Indeed 👇!
Here is a live shot of Mr. Morando getting up to speed on the various relationships:
Anyway, here’s the skinny on the proposed consanguineous transactions.
The DIP is a headline $50mm revolver (a) provided by Second Avenue Capital Partners LLC (“SACP”), which is owned by SB360 Holdings, LLC (“Holdings”), itself, as noted in the chart above, 60% owned by the Schottenstein family and (b) will roll up the $39mm prepetition ABL facility on a creeping basis during the interim period and fully on final order. In other words, only about $11mm of new money. Because it’s a revolving loan, the interest rate floats, but the minimum is 8.2%, and for the financing, SACP will treat itself — it’s the holidays, why not? — to a $500k closing fee, a quarterly $50k agency fee, a $25k/month collateral monitoring fee, and a $250k exit fee, as well as a standard unused line fee.
The debtors will use the cash to run a sale and marketing process under which Schottenstein-family-owned ASI Purchaser, LLC (“ASI”) will serve as the debtors’ stalking horse with a purchase price of ~$147.9mm, ~$83.2 of which will be used to immediately pay down amounts owed to PNC Bank NA (“PNC”) under the debtors’ prepetition letter of credit (“LOC”), term loan facility, and presumably something else … because the balance of the consideration (~$64.7mm) will be used to assume other PNC-owing liabilities and the chart ☝️ only shows ~$78mm in LOC and term loan debts. If you’re curious where the $69.9mm delta fits in, we are too, but we didn’t get too worked up about it because this is the debtors’ proposed sale timeline …
Judge Stickles put it bluntly at the 3-hour November 25, 2025 first-day hearing when debtors’ counsel, Pachulski Stang Ziehl & Jones LLP (“PSZJ”) asked what the court preferred for a bidding procedures objection deadline:
“I think you’re going to end up communicating with the committee on this anyway.”
The court dedicated the bulk of the hearing to mundane affairs, like whether creditors ought to get email vs snail mail notice (as always, the latter), and untangling the Schottensteins’ innumerable connections to the debtors. A process that took too long.
At the 3-hour mark, while the debtors were advocating to let them assume, on an interim basis, a consulting agreement with Holdings-owned-and-therefore-yet-another-Schottenstein-affiliate SB360 Capital Partners, LLC (“SB360”) that’ll allow the debtors to continue their liquidation process, Judge Stickles threw in the towel for the day and made everyone come back the next day at 11am ET to give her time to gather her thoughts.
We probably would’ve as well because “interim assumption” is nonsensical, but that’s another story. Regardless, she must’ve thought so too because, at the second first-day hearing, the court 86’d that “interim assumption” language … but decided the debtors could continue “performing under” the agreement until a final hearing. Is there any real difference? No, not really, which, for us, begs the question of what “interim assumption” accomplished in the first place.
Anyhoo, the second-day hearing is scheduled for December 15, 2025 at 10:30am ET and, until the official committee of unsecured creditors objects, the bidding procedures will go forward on December 9, 2025, although, regardless of the date, we’re pretty confident the debtors’ POS business will stay within the Schottenstein family. Good a place as any, because aside from the social media team, the business looks like 💩.
The debtors are represented by the aforementioned PSZJ (Laura Davis Jones, Peter Keane, Mary Calloway, David Bertenthal, Maxim Litvack) as legal counsel, the aforementioned BRG as financial advisor, SSG Capital Advisors LLC (J. Scott Victor, Teresa Kohl, Patrick Swanick, Craig Warznak) as investment banker, A&G Real Estate Partners as real estate consultant, SB360 Capital Partners as liquidation consultant,***** and C Street Advisory as communications advisor. The debtors’ conflicts committee is composed of Adam Zalev and is represented by Goodwin Procter LLP (Kizzy Jarashow, Stacy Dasaro) and Potter Anderson & Corroon LLP (L. Katherine Good). SACP, as DIP agent and lender, is represented by Choate Hall & Stewart LLP (John Ventola, Jonathan Marshall, Lucas Barrett) and Richards Layton & Finger PA (Daniel DeFranceschi, John Knight). PNC Bank NA, as prepetition agent, is represented by Goldberg Kohn Ltd. (Randall Klein, Zachary Garrett, Eva Gadzheva) and Blank Rome LLP (Regina Stango Kelbon, Stanley Tarr, Lawrence Thomas III). ASI, as proposed stalking horse purchaser, is represented by Wachtell Lipton Rosen & Katz (Amy Wolf, Emil Kleinhuas, Scott Charles, Neil Snyder, Angela Herring) and Morris Nichols Arsht & Tunnell LLP (Derek Abbott, Luke Brzozowski).******
*The debtors’ largest concentration of stores is in Ohio (20), Michigan (16), and Illinois (11).
**Mr. Morando’s colleague Stephen Coulombe is the other half of this dynamic duo.
***Exclusive of lease liabilities, which the debtors are working through.
****To be fair, if you think the debtors just suck and they ought to stop whining about the current state of the housing market check out these charts 👇 which put the debtors’ struggles in perspective:
*****In turn, SB360 is represented by Leichtman Law PLLC (Maura Russell) and Morris Nichols Arsht & Tunnell LLP (Luke Brzozowski).
******With this lineup of professionals, the debtors will find that the bankruptcy process is far from “value city.”
Company Professionals:
Legal: Pachulski Stang Ziehl & Jones LLP (Laura Davis Jones, Peter Keane, Mary Calloway, David Bertenthal, Maxim Litvack)
Financial Advisor/CRO: Berkeley Research Group LLC (Stephen Coulombe, Rudy Morando)
Investment Banker: SSG Capital Advisors LLC (J. Scott Victor, Teresa Kohl, Patrick Swanick, Craig Warznak)
Real Estate Advisor: A&G Real Estate Partners
Liquidation Consultant: SB360 Capital Partners
Legal: Leichtman Law PLLC (Maura Russell) and Morris Nichols Arsht & Tunnell LLP (Luke Brzozowski)
Strategic Communications Advisor: C Street Advisory Group
Conflicts Committee: Adam Zalev
Legal: Goodwin Procter LLP (Kizzy Jarashow, Stacy Dasaro) and Potter Anderson & Corroon LLP (L. Katherine Good)
Claims Agent: Verita (Click here for free docket access)
Other Parties in Interest:
Prepetition ABL + DIP Agent: Second Avenue Capital Partners LLC
Legal: Choate Hall & Stewart LLP (John Ventola, Jonathan Marshall, Lucas Barrett) and Richards Layton & Finger PA (Daniel DeFranceschi, John Knight)
Prepetition LOC & Term Facility Agent: PNC Bank NA
Legal: Goldberg Kohn Ltd. (Randall Klein, Zachary Garrett, Eva Gadzheva) and Blank Rome LLP (Regina Stango Kelbon, Stanley Tarr, Lawrence Thomas III)
Equity: Schottenstein Stores Corporation
Stalking Horse Purchaser: ASI Purchaser LLC (affiliate of Schottenstein)
Legal: Wachtell Lipton Rosen & Katz (Amy Wolf, Emil Kleinhuas, Scott Charles, Neil Snyder, Angela Herring) and Morris Nichols Arsht & Tunnell LLP (Derek Abbott, Luke Brzozowski)