Z Gallerie files Chapter 11 bankruptcy again, plans to sell assets

By Sarah Lizee

Olympia, Wash., Oct. 17 – DirectBuy Home Improvement, Inc., which does business as Z Gallerie, filed Chapter 11 bankruptcy for a second time on Monday in the U.S. Bankruptcy Court for the District of New Jersey.

The Gardena, Calif.-based furniture retailer filed its first bankruptcy case in March 2019 in the U.S. Bankruptcy Court for the District of Delaware and emerged from those proceedings in June 2019.

The company said in court documents that it plans to conduct a going-concern sale process for all or some of its assets on an expedited basis. The company is simultaneously initiating “soft” sales in its retail locations to monetize its inventory.

Z Gallerie is seeking approval of a $2.2 million debtor-in-possession super-priority senior secured term loan with ZG Lending SPV, LLC as lender.

The facility would consist of $1.1 million in new money and a $1.1 million rollup of prepetition loans.

The facility carries no interest or fees and is set to mature on Jan. 31.

The new money loans would be funded in the amount of $400,00 upon entry of an interim order and the remaining $700,000 upon entry of the final order. The rollup would be effective as and when the two tranches of financing are funded.

The company is also seeking approval to continue using prepetition collateral.

In its petition, the company listed 200 to 999 creditors, $50 million to $100 million in estimated assets and $50 million to $100 million in estimated liabilities.

Its largest unsecured creditors are FedEx, based in Pasadena, Calif., with a $1.32 million claim, and AT&T, based in Carol Stream, Ill., with a $1.17 million claim.

Z Gallerie’s Chapter 11 case number is 23-19159.

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