Simply Interior Homes - Chapter 11 Case Summary

Business Description

Headquartered in Rock Hill, South Carolina, Simply Interior Homes, LLC ("SIH") and its affiliated debtors (collectively, the "Debtors") operate a home textiles and home décor business that designs, sources, and supplies fashion bedding, window treatments, bath products, decorative textiles, and related home furnishings—referred to as "soft goods"—for major retailers.

The Debtors function as a business-to-business wholesale supplier and sourcing partner to major retail channels, including department stores, off-price retailers, e-commerce retailers, and home centers. Their product assortment spans multiple home categories:

• Bedding: comforters, duvets, quilts, sheet sets, mattress pads, decorative pillows, and throws.
• Window treatments: curtains, drapes, valances, curtain liners, and hardware.
• Bath products: towels, bath mats, shower curtains, and bath rugs.
• Furniture and décor: accent pillows, ottomans, chairs, storage shelves, slipcovers, rugs, and floor coverings.

Anchoring the Debtors' offering is a licensed and proprietary brand portfolio that represents a key component of their strategic value and going-concern business:

• Eclipse: a window treatment brand featuring noise-reducing and light-blocking curtain solutions carried at Walmart, HomeGoods, Amazon, and other major retailers.
• Hookless: a bath brand featuring patented hook-free shower curtain technology carried at Lowe's, Home Depot, and other home improvement and mass merchant channels.
• Historic Charleston: a bedding collection inspired by classic decorative arts.
• Kate Spade Home: a premium licensed bath accessories brand.

The Debtors were formed in early 2025 through the carve-out of the soft goods divisions of Keeco, LLC ("Keeco"), a portfolio company of Centre Lane Partners ("CLP"). As of the Petition Date, the Debtors employ approximately 27 people across their principal office in Rock Hill, South Carolina and their showroom and sourcing locations.

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Corporate History

The Debtors' roots lie in Keeco, formerly one of North America's largest diversified home textiles suppliers and a CLP portfolio company. Keeco was organized around two core business segments:

• Utility bedding: products such as pillows, comforters, and mattress pads.
• Soft Goods: blankets, sheets, comforters, quilts, throws, duvets, decorative pillows, and bed-in-a-bags, together with blackout and decorative window curtains and shower curtains.

Over approximately five years, CLP scaled Keeco through a series of acquisitions focused on utility bedding. In the process, those transactions also added non-core Soft Goods categories that were not synergistic with Keeco's manufacturing-focused utility bedding platform.

The Carve-Out Transaction

CLP sponsored the carve-out of the Soft Goods division from Keeco into a standalone company—the Debtors—through a two-step structure:

• Step one – Foreclosure: With Keeco's term loan facility then in default, the Collateral Agent conducted a partial strict foreclosure under Article 9 of the Uniform Commercial Code over certain collateral associated with the Soft Goods division. The collateral was transferred to designated transferee entities established by CLP and ultimately vested in Simply Interior Homes, LLC (f/k/a Soft Goods Operating, LLC).
  • Following the Carve-Out Transaction, Keeco rebranded as "Live Comfortably" to focus exclusively on its core utility bedding business—supplying utility bedding products to major retail and hospitality customers and maintaining licensed utility bedding brands.
• Step two – Membership Interest Purchase Agreement: The parties completed the carve-out through a Membership Interest Purchase Agreement (the "MIPA") among Simply Interior Homes AcquisitionCo, LLC (f/k/a Soft Goods, LLC), as purchaser; Live Comfortably Borrower LLC (f/k/a Keeco Borrower LLC), as seller; and SIH, as the company.
  • The majority of the cash purchase price under the MIPA was used to satisfy certain subordinated notes issued by SIH in connection with the foreclosure.

Originally expected to close in late October 2024, the Carve-Out Transaction ultimately closed approximately four months late, on February 21, 2025. Upon closing, the Debtors commenced operations as an independent company with their own management team.

• CLP and its affiliates nonetheless remained the indirect sole owner and effective decision-maker of the Debtors, which continued to rely on Live Comfortably for many services essential to their operations.
• Concurrently with the closing on February 21, 2025, the Debtors and Live Comfortably executed several ancillary agreements—including a Transition Services Agreement (the "TSA")—to facilitate the Debtors' transition to standalone operations.

Corporate Structure

Simply Interior Homes AcquisitionCo, LLC ("AcquisitionCo") is the parent Debtor entity, and SIH is its direct subsidiary. There are seven Debtors in these Chapter 11 Cases: SIH; AcquisitionCo; SIH Beckham Buyer, LLC; SIH-HSD Holdings, LLC; SIH-BB Holdings, LLC; SIH-DMD Holdings, LLC; and SIH-SR Holdings, LLC (the latter five formed for a transaction that never closed and never operated). The entities above AcquisitionCo in the corporate structure are not Debtors in these Chapter 11 Cases, including:

• Simply Interior Homes Intermediate, LLC ("Holdings");
• Simply Interior Homes Holdings, LLC; and
• Simply Interior Homes TopCo, LLC.

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Operations Overview

The Debtors' business model encompasses private label manufacturing, licensed brand development, and retail merchandising support, supported by a geographically distributed operating footprint:

• Principal office: Rock Hill, South Carolina.
• Showroom: New York, New York—a former Keeco showroom space at 390 Fifth Avenue currently shared with Live Comfortably.
• Overseas sourcing offices: China, Pakistan, and India.
• Warehousing: third-party facilities located primarily in Reno, Nevada and Whitestown, Indiana.

Sourcing and Logistics

The Debtors rely heavily on international sourcing and manufacturing partnerships, maintaining relationships with manufacturers and suppliers in India, Pakistan, China, and Vietnam, among other countries.

• This overseas sourcing infrastructure enables the Debtors to manage tariff impacts, maintain production flexibility, and achieve speed-to-market delivery for their retail partners.
• In the ordinary course, the Debtors depend on third-party logistics providers and freight carriers to ensure the timely transport and delivery of merchandise to their retail partners and distribution centers.

Transition Services Agreement

The TSA, central to the Debtors' day-to-day operations, was negotiated and established by CLP and Live Comfortably's leadership in 2024—prior to the hiring of the Debtors' management team that would ultimately operate under its terms. CLP appears to have effectively managed Live Comfortably and directed its performance under the TSA.

The services provided under the TSA span substantially all of the Debtors' back-office and certain operational functions:

• Information technology: corporate IT infrastructure, cybersecurity, enterprise applications, and end-user computing support.
• Finance and accounting: accounts receivable, accounts payable, corporate accounting, financial planning and analysis, tax compliance, and treasury functions.
• Human resources: payroll processing, benefits administration, workers' compensation coverage, and recruiting.
• Operations support: customs bond access, transportation and logistics management, and distribution center access.
• Sales and marketing: demand and supply planning, account management, product development, merchandising, design, and e-commerce platform management.

At formation, the Debtors had no independent information technology systems of their own. Compounding this, delays in updating the Debtors' formal name change with the Internal Revenue Service slowed the establishment of new vendor accounts with certain major customers, forcing the Debtors to rely on Live Comfortably to receive and remit customer remittance payments throughout 2025 and continuing with several major customers in 2026.

• According to the Debtors, Live Comfortably—at CLP's direction—frequently delayed remitting these payments despite repeated demands for timely remittance.
• From January to May 2026, the Debtors' customers remitted more than 75% of the Debtors' collections to Live Comfortably's bank accounts, ranging from $300,000 to $1.5 million per week.
• During the week ended May 31, 2026, Live Comfortably received approximately $311,000 in customer payments expected to be remitted the following week; as of June 7, 2026, and despite repeated requests, those funds had not been remitted.
• The Debtors intend to investigate and review the reconciliation of all amounts owed to them by Live Comfortably.

The TSA also imposed substantial cost burdens on the Debtors, including trailing annual charges exceeding $2.7 million. A dispute arose between the parties regarding amounts owing under the TSA, culminating in Live Comfortably—under the direction of CLP—threatening to terminate the agreement and discontinue the critical services provided thereunder, which contributed to the Debtors' decision to commence these Chapter 11 Cases.

As of the Petition Date, the Debtors remain critically dependent on the services provided under the TSA and have not completed the transition to fully independent, standalone operations.

• The Debtors lack certain internal infrastructure, systems, and personnel to perform many of the functions currently provided by Live Comfortably.
• According to the Debtors, any disruption or termination of these services would materially impair their ability to operate the business, fulfill customer orders, maintain financial reporting, and comply with applicable legal and regulatory requirements.

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Prepetition Obligations

As of the Petition Date, the Debtors’ capital structure comprises three principal components: funded debt under the Prepetition Credit Facility; subordinated secured and unsecured obligations owed to affiliates of CLP under the Subordinated Sponsor Notes; and general unsecured liabilities, consisting primarily of trade payables and disputed obligations under the TSA. The Debtors’ assets consist principally of inventory, accounts receivable, FF&E, brand license agreements, international product sourcing and vendor relationships, and intangible intellectual property. The Debtors entered these cases with approximately $293,459 in cash on hand, the majority of which is reserved for employee obligations.

Prepetition Credit Facility

• The Debtors’ funded debt consists of not less than $17.9 million outstanding under a revolving credit facility governed by a Credit and Guaranty Agreement dated February 21, 2025, plus accrued but unpaid interest, fees (including commitment termination fees), and expenses.
  • The facility provides for aggregate revolving credit commitments of $30 million and matures on February 21, 2029. The obligations are secured by a first-priority lien on substantially all of the Debtors’ assets.
  • Simply Interior Homes Intermediate, LLC (f/k/a Soft Goods Intermediate, LLC) serves as Holdings, with AcquisitionCo and Simply Interior Homes, LLC (f/k/a Soft Goods Operating, LLC) as Borrowers, alongside the other Guarantors party to the agreement.
  • Great Rock Capital Partners Management, LLC acts as Administrative Agent, with GRC SPV Investments, LLC and Wingspire Capital LLC serving as Lenders (together with the Administrative Agent, the “Prepetition Lenders”).

Subordinated Sponsor Notes

• In connection with the Debtors' formation and subsequent capital contributions, CLP provided capital through its affiliated funds in the form of two subordinated notes, with aggregate obligations of approximately $70 million as of the Petition Date. The notes are subordinated in right of payment and lien priority to the Prepetition Credit Facility pursuant to a Subordination and Intercreditor Agreement dated February 21, 2025.
  Note: The stated principal amounts of the two notes below total approximately $28.9 million, while the declaration reports aggregate obligations of approximately $70 million as of the Petition Date. The declaration does not reconcile this difference, which may reflect accrued and unpaid interest, paid-in-kind amounts, or additional capital contributions not separately itemized.
  • Centre Lane Partners IV, L.P.: A Sixth Amended and Restated Note dated February 20, 2026, in the principal amount of $13,827,994.83, with unpaid principal and accrued interest due August 21, 2029. The obligations are secured by a second-priority lien on substantially all of the Debtors' assets pursuant to a Second Lien Security Agreement.
    Note: The declaration refers to this instrument as the "Sixth Amended and Restated Note" but describes the second-priority lien as securing the "Fifth Amended and Restated Note." This summary uses "Sixth" throughout; the controlling instrument and the lien it secures should be confirmed against the Second Lien Security Agreement.
  • 11th Lane Holdings SG, LLC: An Amended and Restated Promissory Note dated November 26, 2025, in the principal amount of $15,047,637.93, with the principal amount payable September 19, 2028. These obligations are unsecured.

Unsecured Claims

• The Debtors’ unsecured liabilities consist primarily of trade payables owed to vendors, including approximately $12 million in aged payables owed to non-go-forward vendors. Additional unsecured liabilities include:
  • Amounts owed to go-forward trade vendors, the full scope of which the Debtors continue to assess.
  • Disputed amounts asserted by Live Comfortably under the TSA.
  • Lease obligations relating to the Debtors’ office, showroom, and other facility locations.
  • Employee-related obligations.
• The Debtors continue to analyze the full scope of their unsecured liabilities and will provide a more detailed accounting in their Schedules of Assets and Liabilities and Statements of Financial Affairs.

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Events Leading to Bankruptcy

• The Debtors commenced these Chapter 11 Cases following a series of compounding and interconnected challenges that, despite the underlying value of their home textiles business, left them without a viable out-of-court path forward:
  • An undercapitalized opening balance sheet at the time of the Carve-Out Transaction relative to the projections of the Debtors’ sponsor, CLP—a discrepancy the Debtors intend to investigate during these cases.
  • The inheritance of diminished customer and supplier relationships from the prior Keeco operations, a reduction in major customer programs that severely impaired the revenue base, and an ongoing dispute over a Transition Services Agreement (the “TSA”) with CLP portfolio company Live Comfortably.
  • The failure of multiple recapitalization, M&A, and refinancing efforts led by CLP, CLP’s subsequent refusal to provide necessary liquidity and capital support, and the imposition of reciprocal tariffs that eroded the Debtors’ margins.
• Notwithstanding these obstacles, the Debtors’ core business retains real commercial value—including a portfolio of recognized home textiles brands, strong international sourcing capabilities, and close relationships with major retail partners. The Chapter 11 Cases are intended to stabilize operations, preserve going-concern value, pursue a value-maximizing transaction, and evaluate potential claims against related and other parties that contributed to the Debtors’ circumstances.

An Undercapitalized Opening Balance Sheet

• The Debtors were formed through a carve-out of the Soft Goods divisions historically associated with Keeco. In connection with the formation, CLP projected the business would generate significant first-year (2025) sales and EBITDA, scaling roughly two-fold thereafter, and would open with $5 million of cash and approximately $49 million of finished goods inventory at closing.
• The Carve-Out Transaction, originally expected to close in late October 2024, was delayed until February 21, 2025. To bridge the delay, CLP pre-funded the purchase price and released inventory, enabling Live Comfortably to recognize approximately $21 million of Soft Goods revenue in January and February 2025—prior to the Debtors’ formation.
  • As a result, the Debtors’ actual opening position diverged sharply from CLP’s projections, which the Debtors’ prospective lenders had relied upon to underwrite financing. The Debtors began with no cash on hand and received only approximately $27 million of inventory, of which roughly $22 million was excess and obsolete.
  • Assumed accounts payable—including payables tied to the pre-formation sales—totaled approximately $32 million versus the projected $25 million. In short, delivered assets were significantly lower, and liabilities significantly higher, than CLP had forecast and represented to the Prepetition Lenders and incoming management during diligence.
• Compounded by Keeco’s prior fill rate failures, the negative change in opening position forced newly hired management to immediately revise the 2025 revenue plan from $185 million down to $86 million. The Debtors thus began their existence undercapitalized—with a damaged customer base, excess and obsolete inventory, no cash, and more debt and payables than anticipated—creating fundamental deficits from which they operated for more than a year but never fully recovered.

Inherited Operational Deficiencies and Customer Program Losses

• In fiscal year 2025, their first full year as a stand-alone company, the Debtors generated approximately $84.7 million in gross revenue and approximately $3.4 million in Adjusted EBITDA—substantially below projections.
  • Underperformance was driven in significant part by the poor service levels and inventory mix inherited from Keeco. On the first day of operations, fill rates stood at approximately 30–40% for most product categories, far short of the 95%-or-greater levels expected by retail partners, resulting in the loss of material sales programs with major customers, including Wal-Mart.
  • Although a comprehensive sales and operations planning initiative rebounded fill rates to over 90% by the fourth quarter of 2025, the damage to customer relationships had already been done. Certain programs were not reinstated, permanently impairing the revenue base and rendering the original financial projections unattainable.
• Liquidity constraints further eroded vendor relationships in a self-reinforcing cycle. Unable to make timely payments, the Debtors saw many suppliers shift to cash-in-advance or prepayment terms while others reduced or eliminated trade credit—straining already limited working capital and further constraining the Debtors' ability to procure inventory and fulfill orders. This dynamic was due in part to Live Comfortably's failure to remit to SIH the receivables, owed to SIH, that it collected under the TSA.
• By the Petition Date, ongoing liquidity shortages had left the Debtors more than twelve weeks behind on material payments to suppliers, including customs and duties. Service providers and customs brokers held inventory at ports and in transit, and the majority of the Debtors’ supplier base—including key overseas manufacturing partners—suspended shipments pending payment, further impairing inventory levels and customer service.

Impact of Tariffs and Failed Tariff Exemption Strategy

• Reciprocal tariffs took effect on April 15, 2025, further reducing the Debtors’ margins. Despite management’s requests for capital to absorb the impact, CLP provided limited support and instead directed the Debtors to forgo passing tariff cost increases on to customers, based on CLP’s expectation that it could secure an exemption from all applicable tariffs. The compounding tariff burden continued to deteriorate the Debtors’ financial position through the second half of 2025 and into 2026.

Failed Recapitalization and Refinancing Efforts

• Across 2025 and into 2026, the Debtors and their stakeholders pursued multiple out-of-court alternatives to address their deteriorating condition, none of which proved sustainable.
  • In early 2026, CLP advised the Debtors and the Prepetition Lenders that it planned to acquire a new business and roll it into the Debtors’ existing operations on an accelerated timeline, intending to provide additional liquidity through the combined enterprise and incremental term financing. To facilitate the transaction, CLP formed new Debtor entities—SIH Beckham Buyer, LLC and its subsidiaries SIH-HSD Holdings, LLC, SIH-BB Holdings, LLC, SIH-DMD Holdings, LLC, and SIH-SR Holdings, LLC—though the transaction never closed and these entities never operated.
  • The transaction ultimately could not close due to unavailability of financing, eliminating the Debtors' potential path to recapitalization, consuming significant resources, and leaving them without any viable out-of-court restructuring path—a situation CLP determined not to resolve through additional financing or capital support. The Debtors and their financial advisor, Reflect Advisors, LLC ("Reflect"), were left to evaluate all remaining options.

TSA Disputes with Live Comfortably

• On April 28, 2026, Live Comfortably delivered a formal notice of breach asserting that the Debtors had failed to pay approximately $5.1 million for transition services under the TSA, and reserving the right to terminate and to suspend or cease providing services.
  • The Debtors dispute Live Comfortably’s characterization of the amounts owed and have demanded a comprehensive reconciliation of all amounts due to and from the parties, including a full accounting of historical “wrong-pockets” payments and setoffs. While the reconciliation remains incomplete, the Debtors believe Live Comfortably—at CLP’s direction—may have inappropriately set off significant cash collections rightly belonging to the Debtors, including customer remittances collected on the Debtors’ behalf throughout 2025 and into 2026 that were never credited to their account.
  • A threatened termination of the TSA would effectively shut down substantially all of the Debtors’ back-office operations—a potentially catastrophic outcome—and would likely trigger an event of default under the Prepetition Credit Facility. After good-faith efforts to resolve the dispute, the Debtors determined these risks could not be mitigated through any available out-of-court mechanism.

The ABL Default and Proxy Exercise

• From June 2025 through April 2026, the Administrative Agent under the Prepetition Credit Facility delivered various notices asserting defaults and events of default. The Debtors’ borrowing base was in an overadvance position, leaving no available financing.
  • Beginning in December 2025, the Prepetition Lenders funded critical obligations—payroll, lease payments, vendor payments, and payments to the Debtors’ third-party logistics provider—in their permitted discretion, notwithstanding extensive events of default. The lack of available liquidity placed even greater strain on the Debtors’ ability to operate as a going concern.
• After CLP repeatedly refused to provide requested liquidity and capital support, on April 27, 2026, the Administrative Agent delivered a Notice of Exercise of Proxy Rights (the “Proxy Exercise”). Acting as proxy and attorney-in-fact for Holdings and SIH under the Security Agreement, the Agent exercised its voting rights to remove Holdings as the sole member of AcquisitionCo and appoint Stuart Kaufman, Managing Director of Arete Capital Partners, LLC, as Independent Manager with sole and exclusive decision-making authority.
  • The newly constituted management, acting through Goodwin Procter LLP as replacement counsel, directed CLP and its affiliates—including Live Comfortably—to immediately cease engaging with customers, vendors, lenders, and other counterparties on the Debtors’ behalf and to cooperate fully in an orderly transition of management, while expressly demanding that Live Comfortably continue performing its obligations under the TSA.
  • Following the Proxy Exercise, the Prepetition Lenders provided additional funding for critical obligations such as payroll, lease payments, and logistics provider payments. However, such funding was insufficient to satisfy outstanding vendor obligations or to sustain operations through the Petition Date.

Determination to File and Path Forward

• Against this backdrop, the Debtors evaluated all available alternatives to a Chapter 11 filing. CLP’s efforts repeatedly failed and its promises of liquidity and financial support did not materialize, and every out-of-court option pursued failed to resolve the Debtors’ structural undercapitalization and deteriorating condition. Left with unfundable liquidity needs, a disputed TSA whose termination would destroy their ability to operate, damaged supplier relationships, and existing defaults under the Prepetition Credit Facility, the Debtors—after deliberation with their advisors—determined that filing these cases and pursuing a value-maximizing sale and liquidation process was in the best interests of their estates and stakeholders.
• The Debtors concluded that value would be best preserved by (1) commencing an orderly liquidation of inventory and other working capital assets and (2) pursuing a sale of the business and/or assets as a going concern or otherwise:
  • After soliciting proposals from four liquidation firms, the Debtors engaged SB360 Capital Partners, LLC as liquidation consultant to conduct sales of on-hand and in-transit inventory, outstanding trade receivables, and FF&E, subject to Court approval (the “Liquidation Process”).
  • The Debtors also engaged Rock Creek Advisors as investment banker to develop and implement a comprehensive sale and marketing process designed to maximize value on a going-concern basis and to conduct lender outreach for competitive debtor-in-possession financing. Any going-concern sale consummated by Rock Creek would remove the applicable assets from the Liquidation Process.
  • Recently engaged, Rock Creek has begun broadly marketing the Debtors’ assets and will continue post-petition to foster a robust, competitive auction. While no stalking horse bidder had been identified as of the Petition Date, the Debtors intend to file a bidding procedures motion shortly after commencement and to designate a stalking horse to serve as an auction floor, subject to higher and better bids and Court approval.
• On DIP financing, the Debtors negotiated a facility with the Prepetition Lenders while Rock Creek contacted alternative sources on the Debtors’ behalf. None were willing to provide financing on a fully unsecured or junior secured basis, leaving the Prepetition Lenders’ proposal as the best and only available financing option under the circumstances.

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First Day Motions and DIP Financing

Contemporaneously with their petitions, the Debtors filed several First Day Motions intended to stabilize operations, facilitate the efficient administration of these Chapter 11 Cases, and expedite the sale process: the DIP Motion, Cash Management Motion, Liquidation Services Agreement Motion, Tax Motion, Wages Motion, Insurance Motion, Epiq Retention Application, Joint Administration Motion, and PII Redaction Motion.

Through the DIP Motion, the Debtors seek authority to enter into a superpriority senior secured, asset-based debtor-in-possession financing facility (the "DIP Facility"), consisting of:

• A senior secured superpriority revolving credit facility in the aggregate principal amount of $5,000,000, excluding fees, premiums, and other amounts payable-in-kind (the "New Money DIP Loans"); and
• A second-out roll-up tranche of $3.00 of Prepetition Secured Obligations for every $1.00 of New Money DIP Loans funded, not to exceed $10,000,000 in the aggregate.

The DIP Facility also authorizes the use of Cash Collateral consistent with an approved budget. All of the Debtors' cash on hand as of the Petition Date is subject to the Prepetition Lenders' liens and constitutes Cash Collateral. The Debtors were unable to obtain post-petition financing on a fully unsecured or junior secured basis, and the Prepetition Lenders required inclusion of the roll-up as a condition of any DIP Facility; the roll-up loans remain subject to challenge during the Challenge Period.