American Freight, a popular furniture and appliance retailer, is closing all 328 of its stores across 41 states as part of Chapter 11 bankruptcy proceedings filed by its parent company, Franchise Group Inc, USA Today reports.
This move is attributed to the company’s struggles with “sustained inflation and macroeconomic challenges” affecting the large durable goods sector, Franchise Group explained in its announcement.
Delaware, Ohio-based Franchise Group, which also owns The Vitamin Shoppe and Buddy’s Home Furnishings, confirmed that these other brands will continue to operate as normal. However, the financial strains from inflation and broader economic pressures prompted the group to make the difficult decision to shutter American Freight locations.
To help liquidate inventory, Franchise Group has enlisted Hilco Consumer-Retail to manage going-out-of-business sales at all American Freight stores.
“Everything is on sale and must be sold,” stated Ian Fredericks, CEO of Hilco Consumer-Retail.
Fredericks promised significant value to customers during the chain-wide closure.
As part of its efforts to maintain operations during the bankruptcy transition, Franchise Group reportedly issued $5.75 million in retention bonuses to certain senior staff and an additional $2.16 million to other employees, contingent upon their continued employment. Industry experts note that these payments are common in bankruptcy cases to maintain continuity and maximize asset value for creditors.
