Home improvement retailers have faced fierce competition from giant retail chains like Home Depot and Lowe's, which forced certain competitors to close store locations, shut their businesses, and file for bankruptcy.
One significant retail bankruptcy a year ago was LL Flooring's Chapter filing on Aug. 11, 2024 which resulted in the company closing down, private equity firm F9 buying 219 of the company's 442 stores and reopening the company under its former name, Lumber Liquidators.
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Also, AFH Air Pros LLC, the parent company of HVAC system installation, repair, and maintenance company Air Pros, filed for Chapter 11 bankruptcy protection on March 16, 2025, seeking a sale of its assets as it faced defaults on prepetition secured debt, underperforming business units, and ongoing operational challenges.
Another iconic home improvement and hardware retailer True Value Co. and seven affiliates, which provide wholesale hardline products to 4,500 independently owned retailers, filed for Chapter 11 bankruptcy protection on Oct. 14, 2024, and sold its assets to hardware, lumber, and building materials cooperative Do it Best Corp.
Significant home improvement retail bankruptcies:
- LL Flooring, Aug. 11, 2024.
- True Value Co., Oct. 14, 2024.
- AFH Air Pros, March 16.
Wellmade Floor Covering International files for bankruptcy
And now, hard surface flooring producer and distributor Wellmade Floor Covering International Inc. filed for Chapter 11 bankruptcy, seeking a sale of its assets after a law enforcement raid on its Georgia manufacturing plant resulted in a debt default and a foreclosure sale.
The Tualatin, Ore.-based debtor filed its petition in the U.S. Bankruptcy Court for the Northern District of Georgia on Aug. 4, which cancelled a scheduled Aug. 5 foreclosure sale of Wellmade's assets.
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The debtor listed $50 million to $100 million in assets and $10 million to $50 million in liabilities in its petition.
Wellmade owes about $10.35 million in unsecured debt, with its creditors including Flooring Investments LLC, owed $3 million; Liberty Mutual Insurance, owed over $709,000; and Vietnam Naise New Materials Company Ltd., owed over $507,000.
The debtor also owes about $27 million in secured debt to AHF IC, consisting of a $20 million term loan and a $7 million revolving credit facility.
Wellmade's major debt holders:
- AHF IC: $20 million secured debt.
- Flooring Investments LLC: $3 million unsecured debt.
- Liberty Mutual Insurance: $709,168 unsecured debt.
- Vietnam Naise New Materials Company Ltd., $507,582 unsecured debt.
Secured lender AHF IC had either scheduled or rescheduled foreclosure sales four times in July, but the Aug. 4 Chapter 11 filing triggered an automatic stay of all legal actions against the debtor while the bankruptcy case proceeds.
Wellmade's legal problems began on March 26, 2025, when U.S. Immigration and Customs Enforcement, the FBI and Georgia Bureau of Investigation executed a search warrant at the company's Cartersville, Ga., manufacturing facility and arrested owner George Chen and his nephew Jiayi Chen on charges of alleged trafficking persons for labor servitude, according to a declaration by Chief Restructuring Officer David Baker.
FBI and ICE investigate Wellmade executives
The FBI and ICE are investigating whether George Chen and Jiayi Chen engaged in alleged labor trafficking in connection with the recruitment of Chinese residents to come to the U.S. on L-1 visas to work for Wellmade.
No criminal charges have been filed against Wellmade, and no criminal charges have been threatened, according to the declaration.
More bankruptcy
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- Popular vision care chain files for Chapter 11 bankruptcy
Three Chinese nationals have filed a lawsuit in the U.S. District Court for the Northern District of Georgia against the debtors, alleging violations of the Trafficking Victims Protection Act, Fair Labor Standards Act, and Georgia's Racketeer Influenced and Corrupt Organizations Act.
The lawsuit is also subject to an automatic stay while the bankruptcy case proceeds.
Northwest Bank issues covenant default on Wellmade debt
Original lender Northwest Bank issued a notice of default on April 18, 2025, claiming covenant defaults under the debtor's prepetition loan documents after the raid on the Georgia factory.
AHF IC purchased Wellmade's secured debt on May 20, 2025, and began negotiations with the debtor's financial adviser, Hilco Corporate Finance, for a stalking-horse bid for the company.
AHF IC seeks to purchase Wellmade for $40 million
The debtor filed a bidding procedures motion on Aug. 8 listing AHF IC as the stalking-horse bidder for a bankruptcy auction with a $40 million credit bid and assumed liabilities.
Wellmade was founded in 2001 by Allen Chen and George Chen after they established a sales office in Portland, Ore., to sell its bamboo flooring products that were manufactured in China.
The company expanded over 20 years and opened its Cartersville manufacturing facility in 2021 to produce its High-Density Polymer Composite Core Flooring.
Wellmade's flooring products are sold by home improvement retailers, including Home Depot and Lowe's.
Home Depot Canada awarded the company in 2019 as First Runner Up for its Innovation Award in recognition of its Opti-Wood HDPC rigid core, waterproof hardwood flooring.
Why did Wellmade file for Chapter 11 bankruptcy protection?
- Wellmade filed for Chapter 11 bankruptcy to stop a foreclosure sale of its assets that was scheduled by its secured lender AHF IC, after a covenant default on secured debt.
