Art Van Furniture to Shed 27 Stores as Liquidation Begins

Bankrupt furniture retailer Art Van Furniture LLC will sell a fifth of its stores to a Dallas-based private equity firm for $6.9 million in cash, marking the beginning of liquidation after it converted to Chapter 7 last month.

U.S. Realty Acquisitions LLC, a real estate investment arm of private equity firm US Assets Inc., has agreed to acquire the inventory and assets of 27 stores in a private sale expected to close May 15. The stores are located in Michigan, Pennsylvania, Ohio, Illinois, Virginia, and Maryland.

Landlords of the leased facilities agreed to waive more than $5.4 million in post-petition rent as part of the deal, bringing in a total of $12.3 million to Art Van’s estate, said Colin R. Robinson of Pachulski Stang Ziehl & Jones LLP, an attorney for Art Van’s Chapter 7 Trustee Alfred T. Giuliano.

The private sale is expected to close more promptly and with less expense than a public auction, Giuliano said in a declaration filed with the court. Some store employees may be rehired after the sale, he said.

Art Van Furniture, which filed for Chapter 11 in March, was forced to convert its case to a Chapter 7 liquidation April 6 after Covid-19 stay-at-home orders halted going-out-of-business sales.

Judge Christopher S. Sontchi of the U.S. Bankruptcy Court for the District of Delaware tentatively approved the sale deal at a remote hearing Tuesday, pending some minor language changes to the sale order.

In a separate order, Sontchi also approved an agreement with furniture retailer American Signature Inc. to take possession of inventory from two of Art Van’s stores and sell it on consignment at other locations.

Under that agreement, American Signature will collect the furniture from stores in O’Fallon, Mo., and Frederick, Md., and sell it at other stores. Art Van’s estate will receive 45% of the proceeds and American Signature will keep 55% after expenses.

Customers who bought furniture at the stores between March 8 and April 7 and paid in full by check, cash, or debit card will be allowed to pick up furniture before the sale. Many Art Van customers have complained to the court and attorneys general in their respective states about paying for furniture that was never delivered.

Also on Tuesday, Sontchi said he would lift the Chapter 11 automatic stay to allow Art Van’s shipper, Kuehne + Nagel Inc., to abandon or liquidate 59 containers of furniture that have been docked at port since stay-at-home orders forced the retailer to freeze business operations.

The case is Art Van Furniture, LLC, Bankr. D. Del., No. 20-10553, Hearing held 5/4/20.