American Signature files for Chapter 11

February 2026 | DEALFRONT | BANKRUPTCY & RESTRUCTURING

Financier Worldwide Magazine

February 2026 Issue

American Signature Inc. (ASI), a longstanding home‑furniture retailer, has filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the District of Delaware. The move initiates a court‑supervised restructuring and sale process under section 363 of the US Bankruptcy Code, aimed at preserving value for stakeholders through a competitive auction.

Court documents reveal that ASI owes approximately $117m to secured lenders and carries around $236m in unsecured obligations, including vendor payables, lease commitments and customer deposits. The filing places ASI among a growing list of home‑furnishing chains that have sought bankruptcy protection in recent years, including Bed Bath & Beyond, Big Lots, At Home Group and The Container Store. At Home and The Container Store have since emerged from Chapter 11 following court‑approved restructuring plans.

Founded in 1948 and headquartered in Columbus, Ohio, ASI operates Value City Furniture and American Signature Furniture stores across multiple states. The company has been family‑owned for nearly eight decades, positioning itself as a trusted destination for affordable and stylish home furnishings.

The bankruptcy filing follows a prolonged decline in furniture demand, exacerbated by one of the most severe housing market downturns in recent history. Persistent inflation and tariffs on imported furniture have further increased operating costs, eroding margins.

“For nearly 75 years, ASI has served as a family-owned furniture destination that communities could rely on to provide style, quality and value,” said Rudy Morando, co‑chief restructuring officer of ASI. “In the face of the ongoing macroeconomic headwinds that have impacted the entire home furnishing industry, the company has carefully evaluated its options to assess the best path forward in the current operating environment.”

To maximise value, ASI has launched a section 363 sale process and expects to enter a stalking horse asset purchase agreement with ASI Purchaser LLC. Under the proposed deal, the buyer would acquire substantially all assets and assume certain liabilities. The court has approved bid procedures setting a bid deadline of 5 January 2026, an auction on 8 January 2026 and a sale hearing on 4 February 2026.

Financing for the restructuring includes approximately $50m in debtor in possession funding from Second Avenue Capital Partners LLC. This facility will support operations and the sale process. ASI has also filed motions seeking authority to pay wages and benefits, maintain customer programmes and honour post‑petition obligations to suppliers and partners.

Pachulski Stang Ziehl & Jones LLP are serving as legal counsel, BRG as financial adviser and SSG Capital Advisors as investment banker. SB360 Capital Partners has been retained to assist with inventory sales, while C Street Advisory Group is providing strategic communications support.

Throughout the proceedings, ASI’s stores and websites remain open, and the company continues to fulfil orders and provide customer service. Prior to filing, selected locations began store‑closing sales offering significant discounts while stock lasts. These events are now part of the court‑approved wind‑down strategy.

Industry analysts note that ASI’s challenges mirror broader trends in the home‑furnishing sector, where pandemic‑era demand spikes have given way to contraction. Rising interest rates have cooled housing activity, reducing discretionary spending on furniture. At the same time, supply‑chain disruptions and tariff regimes have increased costs for imported goods, leaving retailers squeezed between higher expenses and cautious consumers.

Looking ahead, the outcome of ASI’s auction will determine whether the business continues under new ownership or proceeds to liquidation. The stalking horse bid provides a baseline for value, but competing offers could emerge before the auction date. For employees, vendors and customers, the next several weeks will be critical as the company navigates court approvals and sale negotiations.

Mr Morando concluded: “We deeply appreciate our team members, customers and partners and are determined to serve them throughout the Chapter 11 process.”

Fraser Tennant