Contemporary furniture retailer Z Gallerie (Los Angeles) has filed for Chapter 11, citing liabilities between $50 million and $100 million, Furniture Today reports.
The retailer, a unit of CSC Generation Holdings Inc. that does business as part of DirectBuy Home Improvement Inc., filed for protection in the U.S. Bankruptcy Court in the District of New Jersey. The filing, which was reported on Bankruptcycompanynews.com, shows ZGallerie has 21 locations in nine states.
CSC, whose holding includes Sur La Table, One Kings Lane and Touch of Mordern, bought DirectBuy/Z Gallerie out of bankruptcy in July 2019 for $20.3 million.
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 impact the housing market,” said Robert Fetterman, the company’s CFO and Interim CEO.
Z Gallerie said it planned to retain Stump & Co. as its investment banker to market the debtor’s assets.
“Additionally, the debtor [Z Gallerie] also intends to file a motion proposing an efficient, public and flexible auction process in connection with its sales efforts,” the filing said. “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.”
The retailer also said it will run “soft sales” in its stores to monetize its inventory.
The filing noted that Z Gallerie is getting up to $1.1 million of no-interest, debtor-in-possession financing through ZG Lending SPV LLC, a CSC affiliate.