WARREN, Mich. – Warren-based furniture chain Art Van Furniture is planning to close all stores in Michigan, Illinois, Indiana, Missouri, and Ohio.
There are going to be major discounts offered to customers as soon as Friday. How did the company get to this point?
Art Van has been everywhere in Metro Detroit -- on television with advertisements day and night, at 200 store locations and through 5,000 employees. This will all end soon, because a new owner from outside the family crashed spectacularly into the rocks.
In 2017, Art Van Elslander sold his prized company to a Boston hedge fund -- Thomas H. Lee Partners of Boston.
Plunkett Cooney lead bankruptcy counsel Doug Bernstein told Local 4 a lot of things went wrong.
“You’ve got a lot of debt,” Bernstein said. “You’ve got a lot of expansion, and people’s shopping habits have changed.”
Online shopping certainly changed the game, and other retailers moving into the market didn’t help, but Art Van’s vast Midwest reach seemed to work against it.
“Brick and mortar is expensive,” Bernstein said. “The more locations you have, the more overhead you’ve got, so you have to be very efficient. You have to be ahead of the curve. Unfortunately, that doesn’t seem to be the case."
Turnaround expert Patrick O’Keefe told Local 4 he believes rents caused the issues.
“My understanding is the landlords who helped with this sale upped the rents, which made it difficult for the stores to survive,” O’Keefe said.
Bernstein said all you need to know about what happened with Art Van is found in remembering the Toys "R" Us bankruptcy.
“When the hedge fund comes in and buys it, they load it up with debt and carry it as long as they care to and then say, ‘Oh well, we tried. Now we’re done,'” Bernstein said.
There was nothing left for anyone to buy, which explains why such a recognized name will end up liquidated in a Chapter 11 bankruptcy.