Case Study

Governance Over a Complex Chapter 11 Case

Served in a fiduciary capacity as Independent Director and Chair of the Conflicts Committee of the Board of Directors in a complex Chapter 11 with multiple related-party transactions.

Company

American Signature, Inc.

Location

USA

Industry

Consumer / Retail

American Signature Furniture Case Study: Governance Over a Complex Chapter 11 Case

Fiduciary & Interim Leadership American Signature Furniture

The Situation

American Signature, Inc. was a family-founded residential furniture company operating across its Value City Furniture and American Signature Furniture brands, serving as a furniture destination that consumers could rely on for style, quality, and value. The company operated more than 120 stores across 17 states and employed in excess of 3,000 people. Due to multiple factors, the company experienced significant financial challenges, ultimately causing it to commence Chapter 11 bankruptcy proceedings. Numerous corporate parties to the proceedings were related to one another.

Strategy & Execution

CEO and Managing Director Adam Zalev was appointed as an Independent Director and Chair of the Company’s Conflicts Committee in advance of the Chapter 11 proceedings. The Conflicts Committee was formed to, among other things, negotiate, review, and approve all related-party transactions, as well as undertake an investigation into any potential claims and causes of action against those related parties. In addition, Reflect was engaged as financial advisor to the Conflicts Committee to assist it in conducting the investigation.

Outcome

Unable to identify a going-concern purchaser for the business, the stalking-horse bidder—an affiliate of the company—was approved as the successful purchaser, and an orderly wind-down of the business was successfully undertaken. While a challenging outcome, the court commended the professionalism of the parties involved, including the thoroughness of the investigation, overseen by the independent director and conducted by Reflect.