Court approves sale of 28 American Freight stores

A U.S. bankruptcy court has approved the sale of 28 American Freight stores, part of Franchise Group's Chapter 11 restructuring plan. The Delaware-based group, which owns Buddy’s Home Furnishings and other holdings, filed for bankruptcy on November 3, 2024. The company has struggled due to inflation and economic challenges in the durable goods sector.

Judge Laurie Selber Silverstein granted approval for the 28 freight stores sale but withheld decisions on leases in Florida and Tennessee, citing potential state law issues. These cases remain under review pending further clarification of applicable laws.

Under an asset purchase agreement (APA) filed on December 13, 2024, AF Newco I LLC will acquire 31 leases, including 30 store locations and one distribution center, for $1.12 million-plus payment of lease cure costs. Locations include eight stores in Florida, four in Georgia, and others across Ohio, Kentucky, Michigan, and additional states.

The sale aligns with Franchise Group's plan to wind down operations for American Freight. In November, the company issued a WARN notice for corporate headquarters and began closing sales for the stores. Despite challenges, NewCo’s managing member Michael Piper stated that the company has $35 million in financing, has purchased inventory, and expects a net cash flow of $9 million from the reopened stores in 2025.

American Freight's website notes plan to reopen select locations following the court-approved sale of 28 stores. This restructuring aims to stabilize operations amidst sustained inflation and sector-wide pressures.

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