DirectBuy Home Improvement, Inc., the home-decor retailer doing business as Z Gallerie, filed chapter 11 in the U.S. Bankruptcy Court for the District of New Jersey on October 16, 2023, under lead case number 23-19159. The voluntary petition reported assets and liabilities each in the $50 million to $100 million range and identified the case as the brand's third bankruptcy in 14 years. The debtor entered chapter 11 with negative cash flow and no committed going-concern buyer; within nine days the court approved a liquidator to begin store-closing sales at all 21 retail locations.
The case is now a post-confirmation liquidation-trust administration. The court confirmed the plan on April 19, 2024, the plan went effective on April 30, 2024, and Alexandre Zyngier serves as liquidation trustee. Late-stage activity centers on preference complaints filed in October 2025 and contested matters concerning Thomas and Elona Pope and Buy Direct, LLC, which together generate the most active docket entries through early 2026.
The 2023 filing was the brand's third trip through bankruptcy in 14 years. Z Gallerie's prior chapter 11 in 2019 ended with a confirmed plan that nevertheless left the estate with a $6 million shortfall to priority creditors that the WSJ reported as a calculation error in the disclosure statement. The brand was acquired out of that 2019 case by CSC Generation, the same e-commerce holding company that later won the Sur La Table auction over Fortress and Marquee Brands in 2020. By the time of the 2023 filing, the operating entity had been renamed DirectBuy Home Improvement, Inc., and the Z Gallerie brand was the company's core retail identity. Initial trade-press coverage framed the case as a going-concern sale process targeting liabilities of $50 million to $100 million, but the chief executive told reporters that all stores would close if no buyer emerged.
Store Closing Sales, B. Riley, and the Karat Home E-Commerce Sale
The most material going-concern transaction was the sale of the brand's e-commerce assets. Karat Home was the winning bidder for Z Gallerie's e-commerce assets at approximately $7.2 million, with the sale excluding any assignment of brick-and-mortar leases as the company proceeded with the store-closing program. Karat Home subsequently relaunched the Z Gallerie brand in 2026 around an e-commerce-led model with select physical retail. The auction did not produce a brick-and-mortar going-concern buyer, and California-specific coverage tracked the closure of all California locations as the store-closing program rolled forward.
Liquidating Plan, Trust Formation, and Distributions
DirectBuy filed its original plan of liquidation and disclosure statement on February 27, 2024, followed by an amended disclosure statement on March 5, 2024 and a second amended plan of liquidation on April 10, 2024. The court entered the confirmation order on April 19, 2024, and the plan became effective on April 30, 2024. The plan and confirmation order created the DirectBuy Liquidating Trust, transferred the debtor's remaining assets and causes of action into that trust on the effective date, and installed Alexandre Zyngier as liquidation trustee under the plan supplement.
Claim-objection authority shifted on the effective date. The confirmation order gave the debtor exclusive authority to object to claims through April 30, 2024 and assigned that authority to the liquidation trustee thereafter; an extension order entered on November 12, 2024 lengthened the trustee's claims-objection deadline once, and the trustee sought another extension in April 2025 because the trust and its professionals required additional time to evaluate unsecured claims against the trust's limited cash position.
The trust's post-confirmation report for the quarter ended September 30, 2025 shows partial payments to the projected administrative and priority claim base and no distributions to general unsecured creditors. Cumulative cash disbursements since the April 30, 2024 effective date totaled $280,869, with no current-quarter cash disbursements. Special counsel Trif & Mogno had been approved and paid $32,350 on a cumulative basis as of the report date.
The same report itemizes plan payments by class. Administrative claims had been paid $126,701 cumulatively against $128,500 in total anticipated payments, leaving approximately $1,799 of anticipated administrative payments outstanding. Priority claims had been paid $154,358 cumulatively against a $403,000 anticipated total, leaving roughly $248,642 in anticipated priority payments still to be made from the trust. Secured claims and general unsecured claims had received no distributions through September 30, 2025. The trustee projected an anticipated final-decree application date of December 31, 2026.
Preference Complaints and Avoidance Litigation
Beginning in October 2025, the liquidation trustee filed a wave of preference complaints against vendors and service providers that received transfers from DirectBuy in the 90 days before the petition date. The preference complaint against PDP Holdings is representative: the trust's complaints recite the petition date, plan effective date, and trust formation, and then position the trustee as plaintiff acting on behalf of the DirectBuy Liquidating Trust as the assignee of the estate's section 547 and 550 causes of action.
Pope Claim Litigation and District Court Appeal
The case's most active contested-matter docket concerns Thomas and Elona Pope. The Popes filed a broad set of motions seeking, among other things, appointment of an examiner, dismissal of the case, disqualification of debtor's counsel, disgorgement, correction of the petition, and referral of suspected bankruptcy offenses. The liquidation trustee opposed those motions and filed a cross-motion to expunge the Popes' proofs of claim, arguing the Popes lacked standing as creditors and that their underlying positions were barred by res judicata and collateral estoppel tied to prior Indiana litigation involving DirectBuy's predecessor and to the free-and-clear protections of a 2017 Delaware sale order.
On December 18, 2025, the court denied the Popes' motions in full and granted the trustee's cross-motion with prejudice, expunging Thomas Pope's proofs of claim 104 and 132 and Elona Pope's proofs of claim 107 and 150. The Popes filed a notice of appeal on January 5, 2026, identifying the December 18 order as the order on appeal and again tying the appeal to the same expunged proof-of-claim numbers. On March 2, 2026, the Popes moved for acceptance of a late-filed designation of record and statement of issues in the district court appeal, or for an extension of time nunc pro tunc; that request remained pending as of the filing date.
Buy Direct, LLC and the $47.4 Million Indiana Claim
A separate contested matter concerns Buy Direct, LLC, which asserted a $47.4 million claim through proof of claim 102 filed on December 21, 2023 and amended proof of claim 142 filed on December 27, 2023. The trustee moved on November 4, 2025 to expunge those claims on substantially the same theory used against the Popes: that Buy Direct's claim is barred by a prior Indiana judgment in litigation between Buy Direct and DirectBuy and by the free-and-clear provisions of the 2017 Delaware sale order through which the current debtor's predecessor acquired the relevant assets. The Northern District of Indiana had previously dismissed Buy Direct's franchising and distribution claims against DirectBuy's successor, and the underlying Buy Direct, LLC v. DirectBuy, Inc. judgment is in the public record on CaseMine. The trustee's expunge motion uses both the Indiana ruling and the Delaware sale order to argue that Buy Direct's claim is precluded as a matter of law.
Both expunge motions rely on prior Indiana litigation outcomes and the 2017 Delaware sale order to argue claim preclusion. The December 18, 2025 order on the Pope claims is the first ruling on that theory in this case.
DirectBuy Home Improvement files chapter 11 in the District of New Jersey under case number 23-19159.
2023-10-20
Court approves retention of a liquidator to begin inventory sales.
2023-10-25
Store-closing sales begin nationwide across all 21 Z Gallerie stores.
2023-12
Karat Home is identified as the winning bidder for Z Gallerie's e-commerce assets at approximately $7.2 million.
2024-02-27
DirectBuy files initial plan of liquidation and disclosure statement.
2024-04-10
Second amended plan of liquidation filed.
2024-04-19
Confirmation order entered.
2024-04-30
Plan effective date; DirectBuy Liquidating Trust formed; Alexandre Zyngier serves as liquidation trustee.
2024-11-12
Order entered extending the trustee's claims-objection deadline.
2025-04-09
Trustee files another motion to extend the claims-objection deadline.
2025-09-30
Quarter-end reflected in post-confirmation report showing $280,869 cumulative trust disbursements; zero distributions to secured or general unsecured claims.
2025-10
Trustee begins filing wave of preference complaints, including the action against PDP Holdings.
2025-11-04
Trustee files motion to expunge Buy Direct's $47.4 million claims.
2025-12-18
Court denies the Popes' motions and expunges their proofs of claim with prejudice.
2026-01-05
Frequently Asked Questions
Is DirectBuy Home Improvement still operating as a company?
No. DirectBuy Home Improvement liquidated under a confirmed chapter 11 plan that became effective on April 30, 2024, and its remaining assets and causes of action transferred into the DirectBuy Liquidating Trust on that date. The Z Gallerie brand and e-commerce platform were sold to Karat Home, which has since relaunched the brand under its own ownership.
What does the post-confirmation report show about creditor recoveries?
The post-confirmation report for the quarter ended September 30, 2025 shows cumulative trust disbursements of $280,869, administrative claims paid at $126,701 of $128,500 anticipated, priority claims paid at $154,358 of $403,000 anticipated, and zero payments to secured or general unsecured claims. The trustee projected an anticipated final-decree application date of December 31, 2026.
Who is the liquidation trustee for the DirectBuy Liquidating Trust?
Alexandre Zyngier serves as liquidation trustee under the confirmed plan and confirmation order, with authority to prosecute the trust's preference and avoidance actions and to object to claims that transferred into the trust on the April 30, 2024 effective date.
What happened in the Pope litigation?
On December 18, 2025, the court denied Thomas and Elona Pope's motions seeking an examiner, dismissal, disqualification of debtor's counsel, and related relief, and granted the trustee's cross-motion to expunge the Popes' proofs of claim 104, 132, 107, and 150 with prejudice. The Popes filed a notice of appeal on January 5, 2026, and a related motion concerning the appellate record was pending as of March 2, 2026.
Bed Bath & Beyond and other home-furnishings retailers into bankruptcy in 2023 https://sourcingjournal.com/home/home-news/home-bankruptcies-store-closures-retail-2023-bed-bath-beyond-tuesday-morning-484455/
$6 million shortfall to priority creditors https://www.wsj.com/articles/human-error-puts-z-gallerie-in-6-million-bankruptcy-hole-11564438138
won the Sur La Table auction https://www.wsj.com/articles/csc-generation-marquee-brands-top-fortress-in-sur-la-table-bankruptcy-auction-11597092377
going-concern sale process https://www.furnituretoday.com/financial/zgallerie-files-for-chapter-11-looks-for-buyer/
liabilities of $50 million to $100 million https://www.homeaccentstoday.com/industry-news/zgallerie-files-for-chapter-11-looks-for-buyer/
B. Riley Retail Solutions https://www.prnewswire.com/news-releases/store-closing-sales-begin-at-home-decor-and-furniture-retailer-z-gallerie-301966635.html
South Coast Plaza in Costa Mesa https://www.latimes.com/socal/daily-pilot/news/story/2023-10-27/its-curtains-for-z-gallerie-at-south-coast-plaza-as-owners-hold-fire-sale-amid-bankruptcy
e-commerce assets at approximately $7.2 million https://www.homeaccentstoday.com/finance/how-much-are-z-galleries-e-commerce-assets-worth/
relaunched the Z Gallerie brand https://candysdirt.com/2026/03/18/a-stylish-new-chapter-begins-for-z-gallerie/
closure of all California locations https://www.facebook.com/SFGate/posts/after-third-bankruptcy-and-failed-auction-retailer-to-shutter-all-calif-storesre/1401855621986841/
dismissed Buy Direct's franchising and distribution claims against DirectBuy's successor https://www.vitallaw.com/news/franchising-distribution-n-d-ind-claims-against-directbuy-successor-company-dismissed/ald01945b1675c062472fb64360e9df3409e9
Buy Direct, LLC v. DirectBuy, Inc. judgment https://www.casemine.com/judgement/us/66dd2865a4e05d7237cd4ea2
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. See the disclaimer.