Franchise Group, owner of home furnishings retailer American Freight and Buddy’s Home Furnishings, filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware Nov. 3.

As part of its restructuring, FRG announced that it will wind down operations for American Freight. Store closing sales begin Nov. 5. In determining to wind down American Freight, FRG noted that the brand has struggled due to sustained inflation and macroeconomic challenges facing the large durable goods sector.

FRG voluntarily filed for Chapter 11 as part of a restructuring support agreement reached with holders of approximately 80% of its first lien debt. As part of the restructuring plan, the first lien lender group has committed $250 million in debtor-in-possession financing which, subject to court approval and together with cash on hand, will provide FRG with ample liquidity to maintain operations across its businesses and fulfill go-forward commitments to employees, customers, vendors, franchise partners, and other stakeholders of FRG – Pet Supplies Plus, Secaucus-based The Vitamin Shoppe, and Buddy’s Home Furnishings in the ordinary course.

“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings to realize their full potential,” said Andrew Laurence, FRG’s president and CEO. “Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”

In its Chapter 11 filing, Franchise Group estimated assets of $1 billion to $10 billion versus estimated liabilities of $1 billion to $10 billion to an estimated 50,001 to 100,000 creditors.

New Jersey stores

In August, it was reported that B. Riley Financial, which backed Franchise Group’s management-led acquisition last year, had suffered losses due to its involvement with the company. It came under scrutiny earlier this year when previous FRG Chief Executive Officer Brian Kahn’s past dealings came into question. Those issues led to Kahn’s resignation in January.

Franchise Group acquired American Freight in 2019. It combined the stores included in that deal with rebranded Sears Outlet stores it acquired earlier. In 2021, the company bought Top 100 retailer Badcock Home Furniture &more before selling it to Top 100 retailer Conn’s HomePlus in late 2023.

Those two brands would ultimately file for Chapter 11 protection in July. Now, they are nearing the end of going out of business sales.

Within New Jersey, American Freight has one store – Voorhees Township.

Just a few of Franchise Group’s other brands include: Pet Supplies Plus, Sylvan Learning and Wag N’ Wash.

A local FRG brand

The Franchise Group acquired nutritional retailer The Vitamin Shoppe in December 2019. The move aimed to help diversify its business and operations.

In a Nov. 3 statement, a Vitamin Shoppe spokesperson said, “The Vitamin Shoppe’s business is healthy and strong, with sustainable cash flow and dynamic growth initiatives that remain in motion. Our nearly 700 stores and vitaminshoppe.com are fully open for business and our health enthusiast teams are as dedicated as ever to supporting customers on their personal journeys of lifelong wellness.”

The Vitamin Shoppe’s business is healthy and strong, with sustainable cash flow and dynamic growth initiatives that remain in motion.
– Company spokesperson

They also said, “The debt obligations of our parent company necessitated this strategic financial step, which is not reflective of The Vitamin Shoppe’s own financial stability, ongoing commitment to serving our communities, and promising roadmap for future growth.”

Editor’s note: This story was originally published on Furniture Today, an NJBIZ sister publication. NJBIZ reporter Kimberly Redmond contributed to this report.