A home retailer now files an unexpected bankruptcy after reporting liabilities of between $100 million and $500 million, per court filings.
High-end home appliance showroom company Pirch filed for Chapter 7 bankruptcy Friday, “which signals its disappearance from the landscape after years of struggle,” reports Retail Dive.
The company, which is has been backed by private equity firm L Catterton since 2013, has assets between $10 million and $50 million, which are overshadowed by liabilities of between $100 million and $500 million, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of California.
Pirch said that as of March 20, it was “temporarily closing” all its showrooms, describing that as “a pause of business to give management the opportunity to complete a go-forward plan” and saying it is “navigating through various options,” according to a notice on its website still displayed as of press time.
However, a Chapter 7 bankruptcy entails liquidation.
A decade ago, Pirch was wowing luxury appliance shoppers and winning awards with its immersive customer experience — including working faucets and stoves.
But its direct-to-consumer model, which at one point included opening locations in malls, only served to prove how important the design and building trades are to high-end appliance sales.
Pirch pulled back from its brick-and-mortar expansion and pivoted from retail years ago to maintain its focus on its California home base and strengthen ties with interior designers, architects, builders and other go-betweens.
Those relationships also seem shaky, however.
Some interior designers who were dealing with non-delivery of orders and were blindsided by the showroom closures rallied together and consulted with attorneys as Pirch maintained a silence about its prospects, according to an April discussion posted on a website run by interior design firm Pure Salt.
Pirch has also already been in court in recent weeks, facing lawsuits from customers, vendors and American Express, according to various court records.
In a lawsuit filed April 12 that paints a stark picture of the situation at Pirch, American Express noted that Pirch “abruptly halted its business operations (with no explanation) in mid-March and has refused to engage in any meaningful communication for weeks.”
“Consequently, customer disputes are piling up quickly and in exceptionally large volumes,” the payments and financial services firm said, according to the court documents.
Amex also alleges that “Pirch is inexplicably withholding transaction data and information that it is contractually obligated to provide to Amex” under their agreements.
“Amex has effectively been left ‘holding the bag’ for over $5 Million in chargebacks to date, and up to at least $33 Million in additional chargebacks requests initiated by Pirch’s customers, for which Pirch previously received the sales transaction proceeds,” American Express said in court documents.
“To make matters worse, and because no one at Pirch has communicated with Amex, it has no idea whether Pirch intends or even has the available inventory and capability to fulfill customer orders, or whether it even intends to respond to and oppose any of its customers’ disputes,” American Express said.
“There also are indications of possible fraud by Pirch that need to be investigated, adding even more urgency for the need to protect the public and grant the relief that Amex is seeking.”
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Also Read: A Massive Grocery Chain With 400 Stores Is Now Closing
Other Economy News Today
A massive shoe retailer now announces a new wave of layoffs to hit headquarters this summer, affecting over 700 employees.
Nike has announced its ‘second phase’ of mass layoffs, effective June 28, according to a Worker Adjustment and Retraining Notification (WARN) filing.
A total of 740 employees will be impacted in the retailer’s home state.
The layoffs are part of the 2% workforce reduction Nike announced in February, which is taking place across two phases, the company confirmed via email.
Nike said job titles and the number of employees in each category would be provided at a later date, once the company has determined them.
Bumping rights are not available for the impacted employees, reports Retail Dive.
“Nike’s always at our best when we’re on the offense. The actions that we’re taking put us in the position to right-size our organization to get after our biggest growth opportunities as interest in sport, health and wellness have never been stronger,” Nike said in a statement.
“While these changes will impact approximately 2% of our total workforce, we are grateful for the contributions made by all Nike teammates.”
The layoffs are tied to a cost-savings plan Nike unveiled in December, which is aimed at generating up to $2 billion in cumulative savings over three years.
Based on the company’s last annual report, the layoffs to 2% of its total workforce will impact more than 1,600 people.
Savings from the plan are set to be reinvested in driving growth, innovation and profitability.
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Also Read: A Massive Grocery Brand Now Files For Chapter 11 Bankruptcy
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