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A Happy Retail Story - Z Gallerie Reorganizes in Less Than Six Months!

October 29, 2009

Something very positive and unusual happened recently in the chapter 11 case of a retailer.  Z Gallerie, a privately held retailer of home furnishings and decorative accessories, successfully completed an internal reorganization and emerged from chapter 11 in less than six months.  The case was pending in the Bankruptcy Court for the Central District of California, Los Angeles Division.  Chief United States Bankruptcy Judge Vincent P. Zurzolo presided.

Z Gallerie was founded in 1979 by family members Joe Zeiden, Carole Malfatti and Mike Zeiden as a small poster shop in California.  The reorganized company, still owned and operated by the same family members, now operates 54 retail locations in 18 states, a website, and one outlet store.

The internal reorganization was made possible by sales that continued to meet projections, renegotiated rents on many of the store leases, a new equity contribution by the family members, and a $22 million exit financing package provided by Wells Fargo Business Credit.  The plan of reorganization was supported by the landlords and virtually all of the company’s vendors.

Jeffrey W. Dulberg, Scotta E. McFarland and Teddy M. Kapur were Z Gallerie’s bankruptcy counsel.