Painted Tree Liquidates in Chapter 7 After Store Closures

June 6, 2026Updated October 19, 2026

On September 15, 2026, the court terminated Stretto’s appointment as claims and noticing agent in Painted Tree’s chapter 7 liquidation. The termination order followed the August 25, 2026 general claims deadline stated in the creditor notice. The trustee reported that creditors had been notified and the section 341 meeting had been conducted, and sought to end Stretto’s services to reduce administrative costs. Trustee’s motion

Painted Tree Houston, LLC and 64 affiliated debtors filed voluntary chapter 7 petitions on April 28, 2026, in the U.S. Bankruptcy Court for the Southern District of Texas. Christopher R. Murray serves as trustee. The cases share one docket for procedural purposes, while each debtor’s estate retains its separate legal identity. Creditor notice

The liquidation followed a prepetition shutdown and surrender of retail premises. The court authorized rejection of certain unexpired leases on June 15, 2026. Lease-rejection motion Entered order

The selected court filings discussed below extend through October 2, 2026.

Sources (13)

Case record

Oct 20, 2026 · Borror Compensation Order
Oct 2, 2026 · Limited Stay Modification
Oct 1, 2026 · Stay Relief for Insurance Claims

Public case facts. Searchable documents available. Full docket access requires Pro.

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Debtor(s)	Painted Tree Houston, LLC and 64 affiliated debtors
Court	U.S. Bankruptcy Court for the Southern District of Texas, Houston Division
Case Number	26-32918
Petition Date	April 28, 2026
Judge	Jeffrey P. Norman
Chapter 7 Trustee	Christopher R. Murray

Case Snapshot

The creditor notice supplies the filing and trustee information; the joint-administration order identifies the lead docket and assignment to Judge Norman.

Painted Tree’s Shop Owner Marketplace Model

Painted Tree operated indoor marketplace retail locations under a booth-rental model. Individual vendors—referred to in the court papers as Shop Owners—rented booth or shelf space to sell merchandise to consumers. The corporate group consisted of Painted Tree Marketplace, LLC as the parent debtor and 64 affiliates operating a nationwide network of marketplaces. Modified-notice motion

The debtors received monthly rental payments and commissions on Shop Owners’ sales. They also provided point-of-sale services, marketing, event planning, and maintenance. That arrangement separated the vendors’ merchandise from the debtors’ own property: the trustee stated that remaining store inventory belonged to Shop Owners, while estate property left at the premises consisted primarily of fixtures with minimal value. Lease-rejection motion

Prepetition Shutdown and the April 24 Surrender

According to the trustee, Painted Tree notified Shop Owners on April 14, 2026, that it was ending store operations and turning over possession of its leased premises to landlords as of April 24. The trustee reported that possession was surrendered before the April 28 bankruptcy filings and that several landlords had already terminated their leases. Lease-rejection motion

The trustee did not intend to operate the stores. His stated reason for rejecting the remaining leases was to avoid rent and other recurring expenses without a corresponding benefit to the estates. He also concluded that removing and storing the debtors’ remaining fixtures would cost more than their value. These were the trustee’s grounds for seeking rejection and abandonment, rather than a proposal to reopen the marketplaces. Lease-rejection motion

Joint Administration of 65 Painted Tree Debtors

The joint-administration order was filed on May 7, 2026, and bears an entry stamp dated May 8. It directs that the related chapter 7 cases be administered under Painted Tree Houston’s case number, with one consolidated docket, file, and service list. Related cases not already assigned to Judge Norman were transferred to him. Joint-administration order

The order is procedural only and does not effect substantive consolidation of the debtors or their estates. Each affiliate’s assets and liabilities remain separate; the common docket simplifies administration without pooling the estates through that order. Joint-administration order

Creditor Notices, the August 25 Deadline, and Stretto’s Termination

The trustee’s May modified-notice motion described approximately 11,000 creditors across 65 debtor entities, most of them individual Shop Owners. It estimated approximately $25,000 for a consolidated mailing and $5,000 for a case website, compared with approximately $125,000 or more for separate notices covering five events. The trustee said conventional noticing would exceed the estates’ available cash. These figures were proposed administrative-cost estimates. Modified-notice motion

Judge Norman approved modified notice procedures and the employment of a claims agent on May 18, 2026. The order authorized an electronic claims-filing interface and required the agent to maintain the official claims registers. Modified-notice order

The creditor estimates changed in subsequent filings. A June 5 notice described approximately 15,000 creditors and requested additional time for creditors and Shop Owners to receive notice and respond to the lease-rejection motion. That later estimate should not be confused with the approximately 11,000-creditor population used in the original cost proposal. June 5 notice

The creditor notice served beginning June 8 supplied the dates that had been left blank in the earlier proposed form: a section 341 meeting scheduled for July 1, 2026, and a general claims bar date of August 25, 2026. Certificate of service and creditor notice

On September 15, the trustee reported that the meeting had been conducted, creditors had been notified, and the claims deadline had passed. He sought termination of Stretto’s services because he considered those services no longer necessary. Termination motion

The court granted that request the same day. Stretto’s appointment ended upon entry of the order, and the court permitted its public case website to be reduced to a static homepage or deactivated at the trustee’s discretion. Stretto therefore should no longer be described as merely proposed or as the continuing claims agent under that appointment. Termination order

The Lease-Rejection Order and the 61-Storefront Footprint

The trustee’s May 15 motion described 61 retail storefronts. It separated unexpired leases proposed for rejection on Schedule 1 from leases already terminated before bankruptcy on Schedule 2. The latter were included for property-abandonment purposes. The storefront count consequently does not establish that 61 unexpired leases were rejected. Lease-rejection motion

The June 15 entered order authorized rejection of the specified unexpired leases. It also authorized abandonment of remaining property, preserved the debtors’ underlying intellectual-property rights, and allowed landlords to dispose of abandoned estate property. Its provisions addressing Shop Owner property at former leased premises permitted landlord disposal after July 15, 2026. Lease-rejection and abandonment order

For claims based on lease rejection, the entered order states a deadline of the later of the general bar date or 30 days after entry of the order. The general creditor notice separately identifies August 25, 2026 as the general claims deadline. Lease-rejection order Creditor notice

A June 26 filing requested a second amended order because the schedules had not been attached to the entered order and agreed comments needed to be added. That filing is a notice submitting a proposed amendment; the approval described here rests on the June 15 entered order. June 26 notice and proposed amendment

Trustee Professionals and Later Claims Administration

The court authorized the trustee to employ Nathan Sommers Gibson Dillon PC, with Iain Kennedy as lead counsel, effective April 28, 2026. The authorized work includes investigating insider transactions and avoidable transfers, analyzing claims, pursuing turnover, and handling estate litigation. The retention establishes counsel’s authorized scope; it does not establish that particular avoidance claims have been filed or recovered. Counsel employment order

The court also approved Munshi, Nguyen & Co. CPA, PC to provide state and federal tax accounting and consulting services, effective May 12, 2026, with Imtiaz Munshi designated as accountant-in-charge. Accountant employment order

Later administration included an October 2 agreed order allowing Azalea Aguilar to continue a personal-injury action involving Painted Tree Sugarland, LLC solely to pursue applicable insurance proceeds. Collection against the debtor, its estate, and the trustee remained stayed. The order preserved defenses and expressly made no admission of liability; it did not establish a recovery from estate assets. Insurance-related stay order

Selected Lease and Creditor-Administration Timeline

Date	Event
April 14, 2026	Shop Owners notified of the shutdown and planned April 24 surrender of premises, according to the trustee’s motion
April 24, 2026	Premises surrendered to landlords before bankruptcy, according to the trustee’s motion
April 28, 2026	Debtors file voluntary chapter 7 petitions, as reported in the creditor notice
May 8, 2026	Entry stamp on the joint-administration order, filed May 7
May 18, 2026	Court approves modified notice procedures
June 15, 2026	Court enters lease-rejection and abandonment order
June 26, 2026	Trustee submits a proposed amended lease order addressing missing schedules and agreed comments
August 25, 2026	General claims deadline stated in the creditor notice
September 15, 2026	Court terminates Stretto’s appointment
October 2, 2026	Court permits limited pursuit of insurance proceeds in the Sugarland personal-injury action

Selected Lease and Creditor-Administration Developments Through October 2, 2026

Frequently Asked Questions

What chapter did Painted Tree file under?

Painted Tree Houston, LLC and 64 related debtors filed voluntary chapter 7 petitions on April 28, 2026. The cases are jointly administered in the Southern District of Texas under case number 26-32918. Creditor notice

Who is the trustee?

Christopher R. Murray serves as chapter 7 trustee for the Painted Tree estates. September termination order

Is Stretto still the claims agent?

The court terminated Stretto’s appointment effective September 15, 2026. The order also permitted its case website to become a static homepage or be deactivated at the trustee’s discretion. Termination order

What was the general claims deadline?

The creditor notice states August 25, 2026. The trustee’s September motion subsequently reported that the deadline had passed. Creditor notice Trustee’s motion

Do 65 debtors mean 65 stores or 65 rejected leases?

The creditor notice identifies 65 related bankruptcy cases. Separately, the lease motion describes 61 retail storefronts and distinguishes unexpired leases from leases terminated before bankruptcy. Those figures measure different things. Creditor notice Lease-rejection motion

Does lease-rejection approval establish creditor recoveries?

The lease order expressly preserves objections to claims and does not establish an obligation to pay them. For recovery analysis, the next records to examine are claims-allowance decisions and the trustee’s distribution filings. The rejection and noticing orders alone do not answer how much creditors will receive. Lease-rejection order

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.