CALIFORNIA – Franchise Group (FRG), the parent company of American Freight, announced on November 5 that it was closing all 328 of its discount furniture and appliance stores nationwide, including 10 locations in Southern California.
FRG said they are filing Chapter 11 bankruptcy to restructure its debt and best position its leading brands – Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings – for continued sustainable growth.
American Freight operations will cease to continue under this restructuring plan.
“As part of this strategy, FRG has determined to wind down American Freight, which has struggled due to sustained inflation and macroeconomic challenges facing the large durable goods sector,” said FRG in a statement.
They go on to say that they will begin store closing sales at locations nationwide and online on November 5.
30% off going out of business sale
According to the American Freight website, everything must go. Items in store and online are on sale with up to 30% off lowest ticketed prices.
The going-out-of-business sale is a tool for maximizing the value of remaining assets. It gives a struggling business a better chance at emerging from Chapter 11 in a more stable financial position.
American Freight SoCal store location closures are Ontario, Corona, West Covina, Santa Ana, Cerritos, Torrance, Oceanside, Palmdale, La Mesa and San Diego.
$2 billion bankruptcy case
FRG is $2 billion in debt to creditors according to the bankruptcy case filed on November 3.
The agreement, outlined in court documents, says that creditors would give up their claims to money in exchange for ownership in the reorganized company. This effectively wipes out much of the debt.
The creditors will loan $250 million to FRG to ensure that it can continue to operate smoothly while it restructures its debt and reorganizes its business.
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