by High levels of unsold inventory post-pandemic were a major factor, but so was a $4 million settlement related to a July 2018 Bestar wall bed collapse
SHERBROOKE, Québec — A confluence of factors, ranging from a high level of unsold inventory built up during the height of the pandemic to a settlement related to a death resulting from the collapse of one of its wall beds, were among the factors that culminated in the demise of Bestar and its sister companies including Bush Furniture.
These and other factors such as increasingly high debt levels were among those cited in recently filed documents that were part of its Chapter 15 bankruptcy filed in United States Bankruptcy Court for the District of Delaware on May 4.
In addition, efforts to negotiate a sale over the past year fell through on multiple occasions, leaving the company to deal with lingering unmet financial obligations amid other major challenges, including a difficult retail environment and rising costs related to tariffs.
Bestar was founded in 1948 in Sainte-Martine de Courcelles, Quebec, and Bush Industries was founded in 1959 in Jamestown, New York, according to bankruptcy documents. Bestar acquired Bush Industries in 2020, a merger that combined their respective capabilities in RTA furniture production.
In a nod to its prowess as an omnichannel supplier of both residential and commercial grade furniture, Bush rebranded as E-Solutions Furniture Group in 2021.
Together, these manufacturers produced a line of RTA furniture that included residential and commercial home office, home entertainment, wall beds, closet systems and modular storage units.
While each company has its own domestic manufacturing in Canada and the U.S., they also import products and components from Vietnam, China and Malaysia “to optimize supply chain and production capabilities,” the filing stated, adding that the debtors offer more than 1,400 SKUs on affordable solutions for homes and small to medium-sized offices. …”
In addition to e-commerce and brick-and-mortar retailers, the companies also sell major retailers such as Costco, along with office supply retailers including Staples and Office Depot, and have long-time partnerships with online retailers Amazon and Wayfair.
While the filing noted that the debtors operated profitably in the wake of the COVID-19 pandemic that resulted in high numbers of consumers working from home, their financial situation deteriorated soon after. It said this resulted from increased tariffs on international imports into the U.S., including materials and products from Asia.
It also noted that in response to strong industry-wide sales during the pandemic, the debtors built up high inventory levels in anticipation of similar levels of future sales. “However, the anticipated sales levels did not materialize, thereby placing the debtors in a precarious financial situation with strained liquidity.”
It went on to note that the companies have been in default under various credit agreements since October 2021 “and despite their efforts to refinance their indebtedness, restructure their business and financial affairs, and identify a going concern transaction, the debtors have not been able to reach a viable solution for their financial difficulties after more than one year of marketing the business as a going concern.”
Another major setback was the July 2018 death of a 79-year-old woman who succumbed to her injuries after a Bestar wall bed fell on her after it detached from the wall.
Ultimately, the company reached a without-admission settlement with the U.S. Consumer Product Safety Commission for $4 million to be payable in installments. While it made the first payment of $1 million in January 2025, it had not paid the second $500,000 installment due in December 2025 according to the May 4 filing. This means it could lose the benefit of the CPSC settlement and have to pay the full penalty of just over $16 million.
With more than 500 business creditors identified in the case, it is unclear when or how much any these creditors, including the recipients of the $4 million settlement with the CPSC, will be paid.
According to court documents, the company has estimated assets of $89.8 million. It also has a series of credit agreements, including a $40 million revolving facility and a $115 million term facility both of which matured on Jan. 10, 2023. While the maturity date of these agreements was extended to April 30, 2025, the filing noted that “the debtors have been in default of their credit agreements for over five years and have been in forbearance with the lenders for most of that time.”
The court noted that as of April 21 the aggregate amount outstanding under the credit agreements was estimated at $107.4 million.
With the lenders’ approval, the company initiated a sale and refinancing process starting in April 2025. However, this resulted in several deals falling through or not being accepted by the lenders, according to court documents.
Following this effort, the company agreed to a bankruptcy proceeding, which ultimately was filed as a Chapter 15. The Chapter 15 process facilitates a bankruptcy and liquidation of the assets for a corporate entity with operations in two countries, in this case Canada and the U.S.
Ultimately, this not only impacts two companies with a combined 145 years in business. It also impacts customers with outstanding orders, plus the livelihoods of 498 workers including 186 in Canada and 308 in the U.S. including 119 unionized employees at Bestar’s Lac-Mégantic facility in Québec.
On April 30, the companies terminated all workers as part of the wind-down and liquidation effort, although 114 workers will be kept on board for the time being in Lac-Mégantic, Sherbrooke, Jamestown and Eri to assist with the liquidation.
