Dive Brief:
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High-end home appliance showroom company Pirch filed for Chapter 7 bankruptcy Friday, which signals its disappearance from the landscape after years of struggle.
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The company, which was backed by private equity firm L Catterton for seven years, has assets between $10 million and $50 million, overshadowed by liabilities of between $100 million and $500 million, according to court documents filed with the U.S. Bankruptcy Court for the Southern District of California. “We sold our equity interest in Pirch in 2020 and have no involvement in the management of its affairs today,” an L Catterton spokesperson said by email.
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Pirch said that as of March 20, it was “temporarily closing” all its showrooms, describing that as “a pause of business to give management the opportunity to complete a go-forward plan” and saying it is “navigating through various options,” according to a notice on its website still displayed as of press time. However, a Chapter 7 bankruptcy entails liquidation.
Dive Insight:
A decade ago, Pirch was wowing luxury appliance shoppers and winning awards with its immersive customer experience — including working faucets and stoves. But its direct-to-consumer model, which at one point included opening locations in malls, only served to prove how important the design and building trades are to high-end appliance sales.
Pirch pulled back from its brick-and-mortar expansion and pivoted from retail years ago to maintain its focus on its California home base and strengthen ties with interior designers, architects, builders and other go-betweens.
Those relationships also seem shaky, however. Some interior designers who were dealing with non-delivery of orders and were blindsided by the showroom closures rallied together and consulted with attorneys as Pirch maintained a silence about its prospects, according to an April discussion posted on a website run by interior design firm Pure Salt.
Pirch has also already been in court in recent weeks, facing lawsuits from customers, vendors and American Express, according to various court records. In a lawsuit filed April 12 that paints a stark picture of the situation at Pirch, American Express noted that Pirch “abruptly halted its business operations (with no explanation) in mid-March and has refused to engage in any meaningful communication for weeks.”
“Consequently, customer disputes are piling up quickly and in exceptionally large volumes,” the payments and financial services firm said, according to the court documents. Amex also alleges that “Pirch is inexplicably withholding transaction data and information that it is contractually obligated to provide to Amex” under their agreements.
“Amex has effectively been left ‘holding the bag’ for over $5 Million in chargebacks to date, and up to at least $33 Million in additional chargebacks requests initiated by Pirch’s customers, for which Pirch previously received the sales transaction proceeds,” American Express said in court documents.
“To make matters worse, and because no one at Pirch has communicated with Amex, it has no idea whether Pirch intends or even has the available inventory and capability to fulfill customer orders, or whether it even intends to respond to and oppose any of its customers’ disputes,” American Express said. “There also are indications of possible fraud by Pirch that need to be investigated, adding even more urgency for the need to protect the public and grant the relief that Amex is seeking.”
A Pirch spokesperson didn’t immediately respond to questions regarding the American Express claims and problems faced by customers.
Correction: This story has been updated to reflect L Catterton’s divestment of its stake in Pirch.
