💥New Chapter 11 Bankruptcy Filing - Wellmade Floor Coverings International, Inc.💥

Human trafficking charges floor and bankrupt flooring producer

Source: @wellmadefloors on X

Here’s a small-debt-but-f*cked-up bankruptcy for y’all. On August 4, 2025, Wellmade Floor Coverings International, Inc. and Wellmade Industries MFR. N.A LLC (together, the “debtors”) filed chapter 11 sale cases in the Northern District of Georgia (Judge Sigler). Founded in ‘01 by bros Ming “Allen” Chen and Zhu “George” Chen* in Nanjing, China, the debtors “… specialize[] in the design, production, and distribution of market top-line hard surface flooring collections.” Or, you know, “flooring”:

Source: Getty Images

That same year, Allen popped over the Pacific to Portland, Oregon to establish a US sales office for their then-bamboo-based products, and after hovering at $2-5mm per year in business, the debtors “… landed a very high-profile, large channel retailer’s business in 2005,” which grew them to $15mm by ‘09.

Source: PETITION LLC Meme Department

As they continued to grow, the debtors diversified and expanded, including into stone plastic composite (“SPC”), before, in ‘15, inventing “… High-Density Polymer Composite Core (HDPC), a rigid core topped with a vinyl wearlayer,” which provides “… complete waterproofing, enhanced heat resistance, and increased density while providing superior flexibility.”

In ‘20, the debtors kicked it up another gear and constructed a state-of-the-art, 328k ft² manufacturing facility in Cartersville, Georgia, which they subsequently expanded to produce more than 200mm ft² of product a year, allowing ‘em to reduce inventory investment and increase product turnover. Today, the debtors produce ~50% of all US-made SPC flooring.

Source: Docket 14. The “state of the art” Cartersville facility. Looks like hell.

So, um, what went wrong? For that, we go to CRO and first day declarant David Baker (of Aurora Management Partners):

“On March 26, 2025, U.S. Immigration and Customs Enforcement (“ICE”), in collaboration with the FBI and the Georgia Bureau of Investigation, executed a search warrant at Wellmade. George Chen, and his nephew, Jiayi Chen, were arrested on charges for trafficking persons for labor servitude.”

Source: GIPHY. Not quite Ye-Neo-Nazism but also evil (allegedly).

He goes on:

“The FBI and ICE are investigating allegations that George Chen and Jiayi Chen engaged in labor trafficking in connection with the recruitment of Chinese residents to come to the U.S. on L-1 Visas to work for the Debtors.

A related lawsuit was filed by Chinese nationals Yu Cong Liu, Yixiang Zhang, and Can Gen Han against the Debtors alleging violations of the Trafficking Victims Protection Act, Fair Labor Standards Act, and Georgia’s Racketeer Influenced and Corrupt Organizations Act.”

Welp …

Source: Tenor

The next month, in April ‘25, the debtors’ prepetition lender Northwest Bank (“NWB”) called a covenant default on its aggregate $18mm+ term loan and revolver.**

Not that it stuck around for the aftermath. About a month later, on May 20, 2025, NWB noped the f*ck out …

Source: GIPHY

… by assigning its debt to AHF IC, LLC (“AHF”), an affiliate of a “significant” customer of the debtors that has expressed (continuing) interest in owning their assets. And we believe ‘em because AHF scheduled a foreclosure sale four separate times during July and early August ‘25 before the debtors pulled the trigger on their filing.

But regardless of who it is, that’s the goal of the BK: find a buyer that wants to own this thing and close a sale. Prepetition, the debtors hired Hilco Corporate Finance, LLC (“Hilco”) to lead the charge, but “… the marketing process for the Debtors’ businesses at that time did not result in any viable transactions.” And we guess a foreclosure wasn’t good enough for the profs’ wallets.

To finance the bankruptcy, the debtors are going with SummitBridge National Investments VIII LLC (“Summit”), which is providing a priming $4mm DIP term loan. But AHF — which ain’t a financier — is signed off on that arrangement, so there ain’t gonna be any theatrics. In any event, the interim draw was initially $120k, but apparently Summit got comfortable funding the full amount during the interim period so long as the debtors designate a stalking horse and execute a DIP credit agreement. The DIP bears interest at 12% (with a 5% default rate!) and features a 2% origination fee (cash, payable on interim order), 1% underwriting fee (same), a 2% exit fee, and, in case someone else steps in to provide the final DIP, a $120k “break-up fee.”

The court held the first-day hearing on August 6, 2025, at which all requested relief was granted, and scheduled the second-day for August 21, 2025 at 10am ET. A bidding procedures motion landed on the docket on August 8, 2025, and what do you know, AHF is the proposed stalking horse.***

The debtors are represented by Greenberg Traurig LLP (John Elrod, Jake Evans, Allison McGregor) as legal counsel, Aurora Management Partners (David Baker) as financial advisor and CRO, and Hilco (Teri Stratton) as investment banker. AHF is represented by King & Spaulding LLP (Austin Jowers, Christopher Coleman) as legal counsel. Summit is represented by Rountree Leitman Klein & Geer LLC (William Rountree, Will Geer, and Ceci Christy) as legal counsel.

*Allen owns 51% and George owns 49% of the debtors’ equity.

**The Chen bros guarantee NWB’s debt too. The debtors otherwise only have ~$1.0mm in prepetition trade claims.

***AHF’s bid is $40mm cash minus a credit bid of the ~$18mm in prepetition debt minus amounts needed to pay off equipment at the Cartersville facility.

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Company Professionals:

• Legal: Greenberg Traurig LLP (John Elrod, Jake Evans, Allison McGregor)

• Financial Advisor and CRO: Aurora Management Partners (David Baker)

• Investment Banker: Hilco Corporate Finance, LLC (Teri Stratton)

• Claims Agent: Verita (Click here for free docket access)

Other Parties in Interest:

• Prepetition Lender: AHF IC, LLC

  • Legal: King & Spaulding LLP (Austin Jowers, Christopher Coleman)

• DIP Lender: SummitBridge National Investments VIII LLC

  • Legal: Rountree Leitman Klein & Geer LLC (William Rountree, Will Geer, and Ceci Christy)