Franchise Group, one of the largest retailers in the United States and owner of American Freight, The Vitamin Shoppe and Pet Supplies Plus, has filed for Chapter 11 bankruptcy in Delaware. This marks the beginning of a financial restructuring process, with a liquidation and promotions.
The company announced that, as part of its strategy to reduce its debt and strengthen its capital structure, it will carry out the complete closure of American Freight in its 357 stores distributed in 40 states of the US. Likewise, to support the closure, it will implement a large liquidation that promises considerable discounts on appliances and furniture.
In order to maximize the value of the Group’s profitable operations, it has $250 million in debtor-in-possession financing to continue its regular activities.
American Freight clearance sale across the United States with discounts and deals
American Freight is the low-cost furniture and appliance chain that has struggled in recent years due to inflation and challenges in the durable goods sector, prompting the decision to close.
The company launched a liquidation sale on November 5, offering consumers discounts of up to 30% on a wide variety of products. Among the items on sale are mattresses, armchairs, dining tables, ovens, refrigerators, dishwashers and a selection of new and slightly cosmetically damaged appliances.
According to a press release issued by Franchise Group, this liquidation, which will also be available on American Freight’s online store, will be managed by Hilco Consumer-Retail.
Ian Fredericks, CEO of Hilco, said: “Our aim is to deliver exceptional value to customers during this chain-closing sale. Everything is on sale and must be sold, so we recommend buying early to get the best selection.”
In an attempt to further attract consumers, American Freight said it will maintain home delivery and financing services in some locations to facilitate the purchase of these clearance products.
The future of Franchise Group
Franchise Group’s financial restructuring aims to significantly reduce its debt through a restructuring support agreement (RSA) with creditors holding 80% of its priority payment obligations.
The RSA seeks to convert this debt into 100% of the equity capital of the reorganized company, which would strengthen the group’s financial position to ensure the growth and stability of profitable brands. In this way, Franchise Group plans to focus on Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings, which will operate normally in their physical and online stores.
Andrew Laurence, President and CEO of Franchise Group, said: “Today’s announcement to reduce our debt is a critical step in enabling our core brands, Pet Supplies Plus, The Vitamin Shoppe and Buddy’s Home Furnishings, to reach their full potential.” He added: “Each of these businesses has a strong value proposition and provides excellent products and services to consumers, and will continue to do so without interruption during this process.”
The impact of the American Freight closure on consumers
The closure of American Freight will affect consumers in more than 40 states who relied on the retailer for affordable appliances and furniture. However, the liquidation represents a unique opportunity for people who are interested in renovating their homes at discount prices.
Franchise Group encouraged customers to take advantage of the deals quickly, as it anticipates rapid inventory turnover due to high demand during the sale.
Franchise Group will also carry out a court-approved marketing process, which will include auction procedures to maximize value and best position its operating businesses for long-term success. The company expects this plan to expand and stabilize its strong brands, which would ensure a sustainable and profitable future for its employees, partners and customers.
