American freight to close all stores amid bankruptcy – American Freight, a well-known furniture retailer, will close its 328 locations across 41 states. This follows a Chapter 11 bankruptcy filing by its parent company, Franchise Group Inc.
Franchise Group, based in Delaware, Ohio, announced the closures on Wednesday. Other brands under its umbrella, such as The Vitamin Shoppe and Buddy’s Home Furnishings, will remain open.
The company explained “persistent inflation and macroeconomic challenges” as the primary reasons of closure, affecting the durable goods sector.
Liquidation Sales Managed by Hilco Consumer-Retail
American Freight will host liquidation sales at all its locations. Hilco Consumer-Retail, a company specializing in store closures, will oversee these sales.
Hilco Consumer-Retail CEO Ian Fredericks stated, “Everything is on sale and must be sold.” He added that the goal is to offer great value to customers during this closing event.
Retention Bonuses for Executives Amid Bankruptcy Process
Court filings show that Franchise Group paid $5.75 million in retention bonuses to key executives to ensure their involvement throughout the bankruptcy proceedings. In addition, $2.16 million in bonuses went to other employees, provided they stay with the company through the bankruptcy.
These payments were made before filing bankruptcy. This move makes the payments unreviewable by creditors and federal financial regulators, according to Bloomberg.
Such bonuses are common in bankruptcy cases. They help maintain operations and assist creditors in recovering funds.
Franchise Group Inc. has not commented on the closure of stores as of Thursday.
