Update from 2/2024: Karat Home has purchased Z Gallerie out of bankruptcy for $7.2 million. The Fort Worth-based furniture and home goods manufacturer now has rights to Z Gallerie’s intellectual property and assets, including the approximately 8,000 SKUs in its product portfolio and its dedicated distribution and staff at its 230,000-square-foot warehouse in Gardena, Calif, according to Home News Now. The Z Gallerie ecommerce site has been relaunched and Karate Home plans to open Z Gallerie stores in 2025.
– Original article from 10/24/2023 begins –
Z Gallerie has filed for bankruptcy due to “severe liquidity constraints” resulting from “underperforming retail stores, adverse macroeconomic trends and industry-specific headwinds,” according to documents filed by the retailer. It has received a $1.1 million line of credit to maintain operations during the bankruptcy process.
This is the third time Z Gallerie has filed for Chapter 11. The saga began in 2009, with the brand’s first filing, and then in 2019 it was acquired by DirectBuy, a discount home goods membership club, which had recently been acquired by parent company CSC Generation. In the most recent bankruptcy filing, Z Gallerie listed 21 stores and roughly 250 employees as assets.
Citing macro conditions such as a stagnant housing market and pandemic-era supply chain hiccups, the home décor retailer revealed that it owes between $50 million and $100 million to between 200 and 999 creditors. Beyond mounting debts for retail landlords and logistics providers, the retailer owes $1.3 million to Federal Express; $1.1 million to AT&T; and nearly $400,000 to Google.
The filing was sparked by Z Gallerie’s dwindling cashflow, which has fallen below $500,000. To get the business back on track, leadership has retained M&A firm Stump & Company to market Z Gallerie assets and find a potential buyer. If the efforts for a strategic sale are unsuccessful, the brand’s assets will be liquidated.