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Lawsuit alleges Art Van family cheated new company
A lawsuit alleges that the family that founded Art Van Furniture cheated the company that bought the business out of millions of dollars.
DETROIT (FOX 2) - The family that founded Art Van Furniture is accused of cheating another company out of millions of dollars, according to a lawsuit.
The lawsuit filed in Delaware's federal bankruptcy court alleges that the Van Eslander family sold four of the store's properties, which left the company that took over with no assets.
FOX 2 legal analyst Charlie Langton said the case comes down to whether it was a legitimate transaction when the family sold the stores.
The sale involved $434 million, and according to the complaint part of the deal to finance the sale to a Boston private equities firm involved leasing back the stores to Art Van, not realizing there was more value to the Art Van Furniture empire than the property.
"They leased the stores back, so when this new company bought them they took those stores with leases and when that new company couldn't figure out what to do, they went bankrupt," Langton said.
Art Van Eslander, who passed away in 2018, founded Art Van in 1959 – thriving family business that was debt free until it was sold, according to the family's statement, which you can read in full below.
They claim the buyer promised the commitment to employees and creditors would continue, but instead, they claim, employees lost jobs and creditors didn't get paid - sullying the family name. That's why last year the family bought back just the name to keep it out of the wrong hands.
"I think the new company failed to take in consideration the value of the great marketing that the Art Van family had in Detroit, and really that made it a lot," Langton said. "When he was out of the picture this company couldn't exist."
The trustee is now going after the Van Eslander family and the late founder's estate to recover $105 million for the bankrupt company's creditors, but the Van Eslander family claims the problems were caused by the buyer of the business well after Art Van was sold.
Statement from Van Eslander family:
"Make no mistake, the bankruptcy proceedings may be labeled "Art Van," but this is about the consequences of business decisions made by the company that purchased our family business in 2017.
"When company founder Art Van Elslander - our father, grandfather and great-grandfather - sold Art Van Furniture as a thriving family business, the company was generating cash, debt-free. We were promised by the buyer that the decades of commitment to employees and communities would continue as strong as ever. Those promises were broken.
"Throughout its history, Art Van’s priorities included paying its suppliers and employees on-time, in full. It has been painful to hear the stories of employees losing their jobs and creditors not getting paid, sullying our family’s good name. That is why we bought the Art Van name last year – to keep it out of the hands of those who could inflict further damage to the reputation built over 58 years of business.
"Importantly, all the family owns now is the name. We have no ownership of what happened to the business after the sale on March 1, 2017.
"The U.S. Bankruptcy Trustee’s efforts to force our family into court to somehow play a role in solving problems caused by the buyer of our business, specifically in the years following the sale, is an unfair attempt to shift losses to us, that we will fight in court."