bankruptcy | May 10, 2024 |
Pirch bankruptcy filing reveals staggering debt

Last month, beleaguered Southern California showroom chain Pirch filed for Chapter 7 bankruptcy after abruptly closing its doors. Now, new documents reveal further details about the depth of the company’s troubles. In a filing submitted to court last week, Pirch’s lawyers outlined the state of the kitchen, bath and appliance retailer’s financial affairs. They are, in a word, dire.

Pirch’s topline debt is a staggering $238 million, owed to thousands of creditors. The biggest debts are to financial service providers, like American Express, which is owed $33 million, and credit card processing company Worldpay, which is owed $5.5 million. (Both have filed lawsuits against the company.)

Then come Pirch’s vendors: kitchen and bath brands like Sub-Zero ($4 million), Toto ($753,696) and Kohler ($567,345). Finally, the company owes tens of millions to a list of more than 3,000 customers, ranging from design firms to contractors to individual consumers—some of which are out as much as $500,000.

The debt load reflects the high price points of the luxury kitchen and bath world—a corner of the industry where a single appliance can run into the tens of thousands of dollars. Still, the number is higher than the company’s total 2023 revenue ($201 million).

Against its debt, Pirch is claiming just over $54 million in assets. The lion’s share of that figure comes from unsold inventory—the document says the chain is sitting on almost $32 million in “finished goods.” (Interestingly, the total book value of the inventory is listed as $28.6 million, meaning the company thinks the resale value of its stock will be higher.)

There’s not a lot of cash in the mix. Pirch’s stated assets include $349,000 in various bank accounts, $378,392 in deposits and prepayments, and $1.1 million in accounts receivable. The company is also claiming a forthcoming tax rebate of almost $11 million and an ability to generate $9.4 million from its showrooms through “lease assumption” payments and the sale of display inventory.

Some of the numbers in these filings are estimates. But to take the documents at face value means that, even after liquidating all of its assets, Pirch—and more pointedly, its many creditors—will still be short $184 million.

The document also sheds some light on the mystery of the chain’s ownership. In 2013, private equity giant L Catterton acquired a stake in the company, and throughout the media coverage of Pirch’s shutdown, many press outlets suggested that it was still at least a partial owner. A representative for the firm eventually set the record straight, pointing out that it had sold its equity in 2020, while stopping short of saying who the buyer was.

The latest court documents indicate that four board members—CEO Steve Smith, COO Will Dillard, CHRO Jan Sangl and CFO Mekall Kaltenbach—collectively own 85.6 percent of the company. The filing also includes $80 million in debt to an entity called CP Fixtures Holdings, an LLC that has the same address as L Catterton, suggesting the possibility that the private equity firm sold its Pirch stake back to the company and structured the transaction as debt.

Neither Pirch nor L Catterton responded to a request for comment. An informational meeting for creditors is scheduled for May 28.

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