Usually, when a retailer files for Chapter 11 bankruptcy protection, it follows a process designed to protect its relationship with customers. Having covered dozens of retail and consumer bankruptcies over the past 30 years, I’ve seen how these filings can impact shoppers, employees, and operations alike.

Typically, the chain will announce conditions for the filing, such as an “all sales are final” policy or a deadline for redeeming gift certificates.

For example, when Sharper Image filed for Chapter 11 in 2008, I held $200 in gift cards and was able to redeem them during its early going-out-of-business sale. Any cards found later, however, were no longer valid, a reminder that even planned protections can be short-lived

Usually, after a Chapter 11 filing, any orders that have been paid for will be shipped or refunded.

That’s not what appears to be happening with American Signature Furniture.

American Signature/Value City Furniture still operating

When American City Furniture, which also uses the Value City Furniture name, filed for bankruptcy protection on Nov. 23, it shared a clear plan of operations.

“In order to maximize value, the company has commenced a sale process pursuant to Section 363 of the U.S. Bankruptcy Code in the hope of a competitive auction within approximately 45 days to elicit higher value for the benefit of all stakeholders. ASI expects to enter into a stalking horse asset purchase agreement with ASI Purchaser LLC under which, subject to court approval, ASI Purchaser LLC will acquire substantially all of the company’s assets and assume certain related liabilities,” it shared in a press release.

That plan was also formally filed with the courts and can be found on PacerMonitor.

In the press release, the company promised it would continue to operate and serve its customers.

“Value City Furniture and American Signature Furniture stores and websites remain open at this time and will continue to fulfill customer orders and provide ongoing customer service to the best of its ability throughout the court-supervised process,” it shared.

Some customers allege that the chain has not done that and is not shipping already-paid orders.

Customers say American Signature Furniture has not delivered

Lori Hanson told WFLA that she has not received the couch she purchased from American Signature Furniture in September, and the company told her she would not be getting a delivery or a refund.

“The rep answered and said we’ve declared Chapter 11 and we’re not going to be able to fulfill your order,” Hanson told the news station. “And he said, ‘OK, the problem is we’ve paid for them, so certainly you’re going to credit our credit card.’ And they said no, we can’t provide a credit. And he said, ‘OK, how about store credit?’ No store credit. So we were just in disbelief.”

WFLA visited a local American Signature and got a similar message.

“A visit to the American Signature store in Tampa resulted in staff directing questions to corporate offices, but employees confirmed there would be no delivery of items not already in the warehouse and no refunds. This leaves customers like Hanson with few options,” it shared.

Corporate representatives did not answer WFLA’s request for comment.

Furniture stores often require an upfront payment.

Shutterstock

What can American Signature customers do?

The news Hanson got from the chain, unfortunately, matches what usually happens in these situations.

“You can file a dispute through American Signature, but the rep told my husband there’s no guarantee you’ll get your money back because they’re going to pay off all of their other creditors first and the customers would get paid last,” Hanson said.

BDO, a large accounting firm, shared what can happen in this type of Chapter 11 bankruptcy situation.

“When a retailer spirals into bankruptcy, all its assets are immediately frozen, which can leave millions of dollars in customer deposits on orders that were not yet completed and/or delivered to customers. Consumers who are owed refunds of their deposits have to get in line and compete with the retailer’s other creditors for any cash that is available,” it explained.

That often means not getting anything.

“In many cases, however, there is nothing the consumer can do but accept the fact that they have lost all or most of their deposit paid to the bankrupt business,” BDO added.

More Bankruptcy:

  • Key auto parts and services company files Chapter 11 bankruptcy
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  • Self-driving-car company files for Chapter 11 bankruptcy protection
  • 35-year-old consumer company files Chapter 11 bankruptcy

In some cases, the bankruptcy court will decide what happens in the case of deposits or prepaid, but undelivered items.

“Payment of a deposit creates a contractual obligation on the part of the business, but once a bankruptcy case commences, the consumer may have to join the ranks of creditors. It may be possible for the business to follow through on its obligation, or to refund the deposit. It is also possible, however, that the deposit will become a discharged debt,” according to Justia.com.

Customers owed goods or money in a bankruptcy should do this

  • Dispute the charge if you paid by credit card: If the merchandise was never delivered, consumers may be able to recover funds by filing a chargeback rather than waiting on bankruptcy proceedings, according to Consumer Reports.
  • File a proof of claim: Customers with undelivered orders become unsecured creditors and must file a claim with the bankruptcy court to have any chance of repayment, added Justia.
  • Watch court deadlines: Bankruptcy courts set strict claim deadlines, and missing them can eliminate any recovery, according to the U.S. Courts.

“Customers who have paid for merchandise that hasn’t shipped during a Chapter 11 bankruptcy are considered unsecured creditors,” said Jeffrey Cohen, partner in the Bankruptcy, Financial Reorganization & Creditors’ Rights Department at Lowenstein Sandler LLP.

“They can file a claim with the court, but recovery is not guaranteed and depends on the company’s assets and the priority of other creditors. Credit card disputes are often the fastest way for consumers to recoup their funds if the items were never delivered.”

American Signature Furniture bankruptcy: key points

  • Chapter 11 filing: American Signature Inc., the parent of American Signature Furniture and Value City Furniture, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware on Nov. 22, 2025, citing severe declines in demand and financial strain, according to PacerMonitor.
  • Financial distress: The company reported assets between $100 million and $500 million and liabilities between $500 million $1 billion, reflecting deep liquidity problems and mounting debt, Accio reported.
  • Store and headquarters impacts: American Signature is closing dozens of stores (33 identified for closure) and its Columbus, Ohio, headquarters with liquidation and discount sales underway at affected locations, according to AOL.
  • Employment effects: WARN Act notices indicate layoffs affecting hundreds of workers, including 326 total job cuts, reported Furniture Today.
  • Ongoing operations: Despite the bankruptcy, many stores and the company’s e-commerce operations continue temporarily while a stalking horse buyer bid and sale process proceed under court supervision, added Accio.
  • Customer issues: Some customers have reported orders not being fulfilled and are advised to file bankruptcy claims or seek refunds through credit card disputes, as refunds and deliveries may be disrupted amid the restructuring, according to the Better Business Bureau.

Related: Iconic Chick-fil-A rival closed over 1,100 stores, no bankruptcy