đ New Chapter 11 Bankruptcy Filing - Simply Interior Homes LLC đ
Fumbled carve-out transaction (allegedly) leaves soft goods purveyor set up for failure.
South Carolina-based Simply Interior Homes LLC, Simply Interior Homes AcquisitionCo LLC (âAcquisitionCoâ) and five other affiliates (collectively, the âdebtorsâ and along with three non-debtor entities, the âcompanyâ) operate a home textiles and home dĂŠcor business that designs, sources and supplies fashion bedding, window treatments, bath products, decorative textiles, and related home furnishings (âsoft goodsâ) for major retailers.*
On June 8, 2026, they filed chapter 11 bankruptcy cases in the District of Delaware (Judge Goldblatt) and here we were thinking to ourselves, âget ready for the usual barrage of lame-a$$ excuses relating to post-covid hangovers, supply chain issues, tariffs, wage problems, yada yada f*cking yada yada (these cases are all getting so damn boring zzzzzzzzz.)â The bankruptcy papers, however, donât(!) reflect those issues (well, other than tariffs). Instead, what weâve got here is a good olâ fashioned post-spinout-clusterf*ck that presages, to the extent thereâs funding to pursue it, litigation against sponsor Centre Lane Partners (âCLPâ)! Yippee!! Letâs dig in âŹď¸.
The debtors trace their origin back to the founding fathers of this country, setting up shop in South Carolina way back in ⌠wait ⌠this canât be right ⌠oh, damn ⌠it is right ⌠2025, LOL. Apparently the debtors were carved out of Keeco LLC (âKeeco,â a/k/a Live Comfortably) after Keeco found itself, after years of acquisitions, with too much non-core sh*t to contend with and felt it prudent to offload extraneous product (the âcarve-out transactionâ).**
It seems, though, that Keeco â and by extension, CLP â didnât exactly go about it in ⌠shall we go for it? ⌠yeah, f*ck it ⌠the most comfortable (đ) way imaginable for the debtors.
Thatâs right, according to the debtors,*** they werenât exactly set up for success. They say that they kicked off with an ââŚundercapitalized opening balance sheet from the time of the Carve-Out Transaction as compared to CLPâs projections (which, among other things, the Debtors intend to investigate thoroughly during these Chapter 11 cases)â; and they inherited strained customer and supplier relationships from Keeco, not to mention a reduction in or loss of (in the case of Walmart Inc., $WMT) certain major customer programs that alienated the debtorsâ revenue base. Those issues â meaningful enough on their own, apparently â were compounded further by (i) a dispute over a transition services agreement (âTSAâ) with Live Comfortably and (ii) bollocksed support from CLP, which, in the first instance, failed in its efforts to secure either a recap/M&A deal/refi and, in the second instance and more importantly, allegedly refused ââŚto provide necessary liquidity and capital support for the Debtors in the face of such failed transactionsâŚ.â It seems that, though carved-out per se, the debtors still heavily relied on both Live Comfortably (by way of the TSA) and CLP (as sponsor).**** Tariffs were just the cherry on top.*****
Before we move on. About that TSA.
What. A. Hot. Mess.
Negotiated with prior management and handed off like a hot potato, it basically left anything and everything under Live Comfortablyâs control, e.g., IT, finance, HR, ops support, sales and marketing, merchandising, the list goes on. Significantly, ââŚthe Debtors were delayed in establishing new vendor accounts with certain major customers and as a result were required to rely upon Live Comfortably to receive and remit to the Debtors their customersâ remittance payments throughout the entirety of 2025 and continuing with several major customers in 2026.â
It gets worse. Per the first day declaration of Reflect Advisors LLCâs Adam Zalev, functioning as the debtorsâ CRO (the âdeclarationâ):
âI understand that Live Comfortably, at the direction of CLP, frequently delayed remitting such payments to the Debtors, notwithstanding the Debtorsâ repeated demands for timely remittance. From January to May 2026, the Debtorsâ customers remitted more than 75% of the Debtorsâ collections to Live Comfortablyâs bank accounts. Such amounts ranged from $300,000 to $1.5 million per week during this period. Most recently, during the week ended May 31, 2026, Live Comfortably received approximately $311,000 in payments from the Debtorsâ customers, which were expected to be remitted to the Debtors in a timely manner the following week. As of June 7, 2026, despite repeated requests for payment, Live Comfortably has not remitted the funds to the Debtors.â
And worse âŚ
âThe Debtors intend to investigate and review the reconciliation of all amounts owing by Live Comfortably to the Debtors.â
We bet they do! We also bet thereâs a bunch of excited folks over at UCC-firms across NY and DE: a freefall chapter 11 with potential litigation in play?! Hereâs a live shot of the fine folks over at Pachulski Stang Ziehl & Jones LLP,****** Willkie Farr & Gallagher LLP, Kelley Drye & Warren LLP, Lowenstein Sandler LLP, McDermott Will & Schulte LLP, and others:
Not to state the obvious, but lacking control over your cash is kinda sorta a problemo when youâve got people to pay.
And a bunch of debt on your balance sheet.
Like $17.9mm of prepetition secured debt.
Plus, per the declaration, (i) a $13.8mm second lien subordinated sponsor note issued in favor of CLP and (ii) a $15mm unsecured subordinated sponsor note issued in favor of 11th Lane Holdings SG LLC (together, the âsubordinated sponsor notesâ).
We think.
Weâre actually not at all sure about those đ figures. Why? Because the debtors didnât seem quite so sure about those figures.
This đ is the provision in the declaration related to the subordinated sponsor notes:
Mr. Zalev summarizes, âIn total, as of the Petition Date, the Debtorsâ aggregate obligations under the Subordinated Sponsor Notes are approximately $70 million.â
Look, Johnny is dumb as bricks and smashed way too many beer cans against his forehead in college but even he knows that the âŚ
Perhaps the DIP motion will shed some light on this disparity? Hereâs what that document had to say about the prepetition capital structure:
Ok, it seems thereâs a second earlier note from CLP that Mr. Ayers hadnât accounted for in his entered-into-evidence-declaration (lol). But even accounting for the DIP motionâs second earlier CLP note of $8.8mm, well âŚ
Were there other secured subordinated sponsor notes?
It seems the proposed DIP order sheds some light on the disparity. Hereâs a provision describing the CLP-related secured subordinated sponsor notes:
For the holy love of G-d. Say what now? Whereâd this $43.8mm sponsor note come from? Why wasnât it mentioned in the declaration? Or the DIP motion? And whatâs with the CLP IV note? Thereâs three different documents with three different amounts attributed to that particular note: the declaration says the CLP IV note is $13.8mm, the DIP motion says the CLP IV note is $8.8mm, and the proposed interim DIP order says its $5.2mm.
Even adding the new found CLP V note to the highest-valued CLP IV note, where does the $70mm total come from? Why canât any of these people do math?!?*******
Or write a fulsome paragraph that actually tells us how the capital structure breaks down?
Anyway, below the secured debt and however the f*ck number of subordinated sponsor notes there may or may not be, thereâs also $12mm in trade debt owed to ânon-go-forwardâ â aka âf*ckedâ â vendors, exclusive of additional amounts that may fuel the GUC pool higher that are related to ââŚ(a) amounts owed to go-forward trade vendors, the full scope of which the Debtors continue to assess; (b) disputed amounts asserted by Live Comfortably under the TSA (as more fully described below); (c) lease obligations relating to the Debtorsâ office, showroom, and other facility locations; and (d) employee-related obligations.â
Ok, now that thatâs past us â and we send our advance apologies to all the professionals involved (but câmon, donât @ us) â letâs just be honest about whatâs going on here. The prepetition secured creditors â GRC SPV Investments LLC (âGRCâ) and Wingspire Capital LLC â are over all of the nonsense. Starting in June â25 and through April â26, Great Rock Capital Partners Management LLC (âGreat Rock,â affiliate of GRC), acting as administrative agent under the prepetition credit facility, delivered various notices of default to the debtors and/or CLP citing, among other issues, an over-advanced borrowing base. After CLP allegedly gave zero f*cks and lent very little additional support to the company, Great Rock then exercised proxy rights and appointed Stuart Kaufman of Arete Capital Partners LLC as independent manager of AcquisitionCo, the top debtor in the companyâs org structure, and vested him with sole and exclusive decision-making authority. While the prepetition secured lenders did provide some additional funding under the credit facility to fund critical needs like payroll, lease payments and payments to the debtorsâ third-party logistics providers, there remained a glaring liquidity need and Mr. Kaufman rolled up his sleeves and got to work.
And so, of course, the debtors explored their options but all roads led to chapter 11 and a DIP credit facility. The prepetition secured lenders stepped up there too: theyâre offering a headline $15mm DIP comprised of a $5mm new money RCF â all on an interim order because thereâs $3.3mm thatâs needed to push forward the debtorsâ proposed sale â and a creeping 3:1 roll-up of pre-petition indebtedness up to $10mm (which, per the budget, appears poised to hit the $10mm within the first four weeks of the case). The DIP carries a repayment mechanism to be remitted out of daily collections, the proceeds of a liquidation process performed by SB360 Capital Partners LLC (âSB360â) and any other proceeds received, first to the new money DIP portion, then the roll-up and then to the remaining prepetition secured obligations. The DIP interest rate is SOFR+7.5%, thereâs an unused line fee equal to 0.75%, a $5k/month collateral monitoring fee, and a 2% PIK closing fee.
Which gets us to the sale process. The debtors already have a bid procedures motion on file (subject to shortened notice because the debtors didnât market prepetition and say they need all of the time they can get prior to the đ sale milestones). Thereâs no stalking horse in tow but the debtors hope to have one designated by July 1, 2026 with a July 30, 2026 auction date and an August 6, 2026 sale hearing. Contemporaneously, SB360 will be liquidating inventory, outstanding A/R, FF&E and more. The debtors say they can turn that off if thereâs a buyer but we wonât hold our breath.
The debtorsâ first day hearing was on June 9, 2026 at 1pm ET and thank G-d almighty the debtors acknowledged right off the bat that theyâll need to file a supplement to the declaration to solve for the pervasive inconsistencies relating to the subordinated sponsor notes. Thanks yâall, đ. Not to beat a dead horse, but that sh*t was a horrible. Beyond that, the hearing was rather uneventful â a few tweaks to the SB360 agreement, shortened notice for the sale approved (subject to an official committee of unsecured creditors demanding more time), no real issue with the roll-up, etc. Notwithstanding our harping on the subordinated sponsor notes mess, this was a very comfortable first day hearing.
The debtors are represented by Goodwin Procter LLP (Kizzy Jarashow, Barry Bazian, Yelizaveta âLizaâ Burton, Artem Skorostensky) and Potter Anderson & Corroon LLP (L. Katherine Good, Brett Haywood, James Risener III) as legal counsel, the aforementioned Reflect Advisors LLC (Adam Zalev) as financial advisor and CRO, and Rock Creek Advisors LLC (Brian Ayers) as investment banker. Stuart Kaufman is the debtorsâ independent manager and he is represented by the omnipresent Pachulski Stang Ziehl & Jones LLP (Mary Caloway, Gregory Demo, Benjamin Wallen). SB360 is represented by Katten Muchin Rosenman LLP (Grace Thompson). For its part, Great Rock is represented by Paul Hastings LLP (Roger Schwartz, Peter Montoni, William Reily, Alison Sikes) and Young Conaway Stargatt & Taylor LLP (Joseph Barry, Joseph Mulvihill). And, lastly, CLP is represented by Greenberg Traurig LLP (Nathan Haynes, Livy Mezei, Anthony Clark).
*The debtors private label soft goods for brands like Eclipse (sold in places like Walmart Inc. ($WMT)), Hookless, Historic Charleston and Kate Spade Home.
**The Live Comfortably name came immediately after the carve-out transaction. We wonât go into the details of the carve-out transaction but it seems pretty clear that the debtors and an eventual official committee of unsecured creditors will have a good time looking into that transaction and any potential causes of action that may stem therefrom.
***Reading the declaration, we were sure that Centre Lane was going to have a different take. Indeed, at the beginning of the first day hearing, Greenberg Traurig LLPâs Nathan Haynes said, ââŚwith respect to the characterization of the facts and circumstances leading up to the filing of these cases as set forth in the first-day declaration, we believe that Centre Lane has been painted in a very unfair light. We strongly disagree with a number of the debtors' allegations, and we look forward to the opportunity to correct the record at the appropriate time.â
****Thereâs not a massive real estate footprint here, apparently, but the debtors do maintain a showroom in NYC that they share with Live Comfortably. Otherwise, the debtorsâ principal office is in South Carolina and, aside from some overseas sourcing offices in China, Pakistan and India, there are only third-party warehousing facilities in Nevada and Indiana.
*****The debtorsâ goods are sourced, manufactured by and supplied from primarily India, Pakistan, China and Vietnam. The debtors rely on third-party logistics providers and freight carriers for transport. You can, therefore, get a sense for why tariffs may have been impactful. Notably, the top 30 list of unsecured creditors is replete with foreign vendors.
******Just kidding. Taking a bird in hand, Pachulski Stang Ziehl & Jones LLP signed up to represent the independent manager. We get it: that sounds like a great option over a freefall retail bankruptcy with a hairy as all f*ck history with its previous owner and current private equity sponsor, đ.
*******Goodwin & Procter LLPâs Kizzy Jarashow literally said, in the context of explaining DIP mechanics to Judge Goldblatt at the first day hearing, âYou donât want me to do the math.â LOL, weâre not sure we want anyone involved with this case to do the math.
Company Professionals:
Legal: Goodwin Procter LLP (Kizzy Jarashow, Barry Bazian, Yelizaveta âLizaâ Burton, Artem Skorostensky) and Potter Anderson & Corroon LLP (L. Katherine Good, Brett Haywood, James Risener III)
Independent Manager: Stuart Kaufman
Legal: Pachulski Stang Ziehl & Jones LLP (Mary Caloway, Gregory Demo, Benjamin Wallen)
Financial Advisor/CRO: Reflect Advisors LLC (Adam Zalev)
Investment Banker: Rock Creek Advisors LLC (Brian Ayers, Patrick Donnelly, James Gansman, Tim Peach)
Liquidation Consultant: SB360 Capital Partners LLC
Legal: Katten Muchin Rosenman LLP (Grace Thompson)
Claims Agent: Epiq (Click here for free docket access)
Other Parties in Interest:
DIP Agent: Great Rock Capital Partners Management LLC
Prepetition Secured Lender + DIP Lender: Great Rock Capital Partners Management LLC and GRC SPV Investments LLC
Legal: Paul Hastings LLP (Roger Schwartz, Peter Montoni, William Reily, Alison Sikes) and Young Conaway Stargatt & Taylor LLP (Joseph Barry, Joseph Mulvihill)
Prepetition Secured Lender + DIP Lender: Wingspire Capital LLC
Sponsor: Centre Lane Partners
Legal: Greenberg Traurig LLP (Nathan Haynes, Livy Mezei, Anthony Clark)