SOUTHFIELD (WWJ) - Art Van Furniture's founding family is being accused of making more than $150 million in "fraudulent transfers" related to real estate deals prior to selling the business and leaving the company in heavy debt, The Detroit News reported on Tuesday.
According to a new federal lawsuit filed earlier this month in a Delaware court, members of the Van Elslander family sunk the Warren-based furniture business by making more millions of dollars in 2017 at the same time they sold off Art Van for $620 million.
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The lawsuit alleges that those real estate transactions stripped the company of its assets and plunged the Art Van into insolvency.
“The Art Van acquisition was a highly leveraged transaction, accomplished by stripping the value out of the debtors’ owned real properties and saddling the debtors with an unsustainable debt load, for the benefit of the defendants and to the detriment of the debtors and their creditors,” the lawsuit says.
The Van Elslander family denied the allegations and hit back at the lawsuit, telling The Detroit News that at the time it sold the company back in 2017, Art Van had no debt and the lawsuit only looks to shift blame for company's financial troubles.
The family said the company's debt was caused by the buyer.
“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,” the Van Elslander family wrote in a statement to The Detroit News.
The Art Van Furniture Warehouse Showroom & Clearance Center was based out of Warren. The company's founder, the late Art Van Elslander, established the company in 1959 and opened his first store in Eastpoint on Gratiot and 10 Mile.
The furniture chain had over 180 stores across multiple states in the Midwest to include Michigan, Ohio, Indiana, Illinois, Iowa and Missouri.
The suit was filed by Chapter 7 bankruptcy trustee of Art Van Furnicture LLC, Alfred Giuliano; he is seeking over $105 million from the Van Elslander family, to include the estate of the late Art Van founder.
Giuliano wrote in his complaint that that "Art Van and its related companies were a profitable family-owned business for more than 50 years," however that seemed to suddenly change when the family went to sell the business for over $620 million, The Detroit News reported.
The Van Elslander family denied any wrongdoing and said they will address the matter in court.
“Throughout its history, Art Van’s priorities included paying its suppliers and employees on-time, in full,” the family wrote. “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.”
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