American Freight, a furniture retailer, is closing all of its 328 stores across multiple states as part of its parent company’s, Franchise Group Inc., Chapter 11 bankruptcy proceedings.

Franchise Group, located in Delaware, Ohio, made the closure announcement on Wednesday within the context of its bankruptcy filing. However, it clarified that its other businesses, such as The Vitamin Shoppe and Buddy’s Home Furnishings, will continue to operate.

The company cited “ongoing inflation and economic challenges facing the durable goods sector” as reasons for the closure of American Freight, according to a press release regarding the bankruptcy.

American Freight will be conducting liquidation sales at its stores in 41 states, managed by Hilco Consumer-Retail, which specializes in liquidation events.

“Our aim is to offer exceptional value to customers during this entire closing sale,” said Ian Fredericks, CEO of Hilco Consumer-Retail. “Everything is discounted and needs to be sold.”

American Freight corporate owner paid bonuses ahead of bankruptcy

According to court documents obtained by YSL News, insiders at Franchise Group received $5.75 million in retention bonuses to encourage them to remain with the firm throughout the bankruptcy process. Additionally, other employees who aren’t insiders received $2.16 million in bonuses that may need to be repaid if they leave before the bankruptcy concludes.

These payments were made before the bankruptcy filing, rendering them unreviewable by creditors and federal regulators, as reported by Bloomberg.

The financial news outlet noted that such bonuses are generally provided to maintain stability during bankruptcy and may help creditors recoup more funds.

Franchise Group Inc. did not respond to a request for comments on Thursday.

(This story has been updated with new information)