Wellmade Floor Coverings: Labor Trafficking Raid Triggers 94-Day 363 Sale

Wellmade Floor Coverings International, Inc.—a rigid core flooring manufacturer with patented HDPC (High-Density Polymer Core) technology and a supplier to The Home Depot, Floor & Decor, and Costco—filed for chapter 11 bankruptcy on August 4, 2025, alongside affiliated debtor Wellmade Industries MFR. N.A LLC. The filing came just one day before a scheduled foreclosure sale to satisfy approximately $18 million in secured debt. Five months earlier, a federal raid by the FBI, ICE, and Georgia Bureau of Investigation on the company's Cartersville, Georgia manufacturing plant had identified 300 to 400 foreign nationals—primarily Chinese workers—as potential victims of labor trafficking, with ICE officials describing 60+ as victims of "horrific" forced labor. Three company officers, including owner George "Zhu" Chen and his nephew Jiayi Chen, were arrested on state felony charges of trafficking persons for labor or sexual servitude.

The 94-day sale process concluded with AHF Products, North America's largest hardwood flooring manufacturer backed by private equity firm American Industrial Partners, acquiring the Cartersville facility through a $40 million credit bid plus assumed liabilities. AHF's affiliate AHF IC, LLC had purchased Wellmade's secured debt from lender NWB on May 20, 2025, positioning itself as stalking horse bidder for the 363 sale. The bankruptcy court approved the sale on October 8, 2025, and the transaction closed November 7, 2025. For AHF, the acquisition completed the company's domestic manufacturing portfolio across all major hard surface flooring categories. CEO Brent Emore stated that rigid core represents approximately 80% of the residential resilient market and that the facility completes its domestic manufacturing portfolio.

HDPC Technology and Market Position

Wellmade built a presence in the flooring industry through early innovation in rigid core technology in the residential resilient flooring market.

Waterproof flooring innovation. In 2017, Wellmade Performance Flooring launched HDPC rigid core flooring, a waterproof innovation that combined rigid core construction with a vinyl wearlayer. The patented and patent-pending technology offered advantages over traditional flooring: 100% waterproof, twice as hard as solid hardwood, more resistant to heat than competitors, greater density, and resistance to dents and scratches. These properties made HDPC an alternative to hardwood and traditional vinyl plank flooring at a time when the residential flooring market was shifting toward resilient categories.

Demand increase. When HDPC products launched, demand exceeded expectations. Initial volume ran approximately 100 containers per month. Within 90 days of launch, each of Wellmade's three largest customers wanted 200 containers monthly—requiring the company to quadruple the size of its manufacturing operation. This growth coincided with major retail partnerships, with The Home Depot, Floor & Decor, and Costco as customers.

Market context. The rigid core flooring segment represents approximately 80% of the residential resilient market according to industry data. The broader SPC/rigid core market exceeds $5 billion, with continued growth limited primarily by supply chain issues. The global flooring market reached an estimated $360.7 billion in 2024, projected to reach $534.6 billion by 2030 at a 6.8% compound annual growth rate. Within this market, resilient flooring including LVT and rigid core vinyl has surpassed traditional categories like carpet in revenue.

Wellmade's Cartersville facility was a domestic manufacturing site in a category typically reliant on Asian imports. AHF Products later acquired the facility.

Federal Labor Trafficking Raid

A multi-year federal investigation led to a March 26, 2025 raid at the Cartersville facility. The investigation focused on alleged labor trafficking at the facility.

March 26, 2025 Operation.

On March 26, 2025, U.S. Immigration and Customs Enforcement, the FBI, and the Georgia Bureau of Investigation executed a federal search warrant at Wellmade's Cartersville manufacturing facility in Bartow County. The Bartow County Sheriff's Office also participated in the operation. The coordinated law enforcement action was part of a multi-year investigation into labor trafficking involving foreign nationals and financial crimes linked to the employer's business practices. Law enforcement simultaneously raided multiple worker residences in addition to the manufacturing facility.

Between 300 and 400 foreign nationals working at the facility—primarily Chinese workers recruited through temporary visa programs—were identified as potential trafficking victims. ICE Special Agent Steven Schrank stated that law enforcement encountered 60+ victims of "horrific" forced labor, with international media coverage reporting the rescue of Chinese nationals from exploitative conditions.

Alleged Worker Conditions.

The allegations described recruitment promises and working conditions. Workers had allegedly been promised high salaries, supervisory or trainer roles, free housing, medical care, and visa assistance through temporary visa programs. Upon arrival in the United States, their travel documents were allegedly confiscated and they were subjected to 12-hour shifts six days a week under unsafe conditions, not allowed to leave the factory or residence.

Former employees described overcrowded housing conditions with approximately 12 people per house and a rotating shift system for transport between residences and the factory. One former employee stated that the conditions were "terrible" and that "the way they treated their employees was terrible." According to a civil lawsuit filed against the company, workers were required to perform unpaid chores at George Chen's home in addition to their factory duties.

Criminal Charges and Arrests.

Three Wellmade officers were arrested on state felony charges of trafficking persons for labor or sexual servitude:

No criminal charges were filed against Wellmade as a corporate entity.

Pre-Existing OSHA Violations.

The labor trafficking allegations emerged against a backdrop of documented safety violations. OSHA had cited Wellmade for nine violations since 2022, with fines totaling more than $72,000. Violations included amputation and entrapment hazards, flying chips and sparks, and potential hearing loss risks.

Financial Cascade to Bankruptcy

The period between the March 26, 2025 raid and the August 4, 2025 chapter 11 filing included a debt sale, a forbearance period, and a scheduled foreclosure.

Factory reopening. The Cartersville plant reopened just two days after the raid, on March 28, 2025, resuming operations and filling customer orders.

Debt sale. On May 20, 2025, Wellmade's prepetition lender NWB sold all of the company's debt to AHF IC, LLC for approximately $18 million. AHF IC is an affiliate of AHF Products, North America's largest hardwood flooring manufacturer owned by American Industrial Partners. The debt sale made AHF IC the secured creditor; it later scheduled a UCC foreclosure sale and served as stalking horse bidder in the bankruptcy.

Forbearance and foreclosure. AHF IC entered into a forbearance agreement that expired on July 4, 2025. When Wellmade could not satisfy its obligations, AHF IC scheduled a UCC foreclosure sale for July 22, 2025 to satisfy the $18 million secured debt. A final foreclosure sale loomed on August 5, 2025.

One-day filing. Wellmade filed for chapter 11 on August 4, 2025—one day before the scheduled foreclosure. The filing stayed the foreclosure and shifted the process to a court-supervised sale.

Civil litigation. A civil lawsuit was filed against Wellmade by Chinese nationals Yu Cong Liu, Yixiang Zhang, and Can Gen Han in U.S. District Court for the Northern District of Georgia. The complaint alleged violations of the Trafficking Victims Protection Act, Fair Labor Standards Act, and Georgia RICO Act, seeking class action status for all Chinese nationals who worked at the facility since June 2020. The civil lawsuit became subject to the automatic stay during the bankruptcy proceeding, freezing the litigation while the sale process proceeded.

363 Sale to AHF Products

AHF Products, already positioned as secured creditor through its affiliate's debt purchase, acquired Wellmade's manufacturing assets through a credit bid structure.

DIP Financing and Sale Process Structure.

Wellmade secured $4 million in DIP financing from SummitBridge National Investments VIII LLC to fund operations through the sale process. The interim DIP order was entered August 7, 2025, with a second interim order on August 25 and the final DIP order following on September 2, 2025. The DIP facility provided working capital to maintain manufacturing operations during the sale process.

AHF IC served as stalking horse bidder with a $40 million credit bid plus assumed liabilities. The credit bid structure allowed AHF to acquire the assets by crediting its secured claim against the purchase price rather than paying cash, a common approach when a secured creditor seeks to acquire collateral through a bankruptcy process. The bidding procedures motion was filed August 8, 2025, with the bidding procedures order entered August 25, 2025.

Sale Approval and Closing Timeline.

The bankruptcy court approved the sale to AHF IC on October 8, 2025. The transaction closed on November 7, 2025, completing a 94-day sale process from filing to closing.

The sale process lasted 94 days from filing to closing.

AHF Products Strategic Rationale.

AHF Products, owned by private equity firm American Industrial Partners, is North America's largest hardwood flooring manufacturer. The company operates 11 manufacturing facilities (10 in the U.S., one in Cambodia), four domestic distribution facilities, and employs more than 3,000 team members. Brands include Bruce, Hartco, LM, tmbr, Capella, Homerwood, Robbins, Raintree, Autograph, and Emily Morrow Home.

AHF's corporate history includes acquisitions in the flooring sector. In December 2018, Armstrong Flooring sold its hardwood flooring business to American Industrial Partners for $100 million, establishing AHF Products with headquarters in Mountville, Pennsylvania. In July 2022, AHF acquired certain assets of Armstrong Flooring, Inc. following that company's bankruptcy, including rights to license the Armstrong Flooring brand name and three U.S. manufacturing facilities.

CEO Brent Emore stated that the acquisition "positions AHF as fully integrated domestic manufacturer across all major hard surface flooring categories" and noted that "with rigid core representing approximately 80% of the residential resilient market, this facility completes our domestic manufacturing portfolio."

Labor Trafficking Litigation in Bankruptcy.

The labor trafficking civil litigation continued during the bankruptcy. Court filings reflect ongoing proceedings related to the trafficking allegations. A Rule 2004 motion was filed in October 2025, with the debtors filing opposition on November 4, 2025 and the unsecured creditors' committee also filing a statement on the same date. On November 19, 2025, the court entered a mediation order authorizing and directing mediation with a settlement judge appointed to address claims related to the labor trafficking allegations.

Professional Team and Key Filings

The debtors retained Greenberg Traurig, LLP as debtor's counsel, with its retention application filed August 26, 2025. Aurora Management Partners Inc. provided CRO services and additional personnel to manage the company through the sale process. Hilco Corporate Finance, LLC served as investment banker, marketing the assets and facilitating the sale process.

Verita Global (formerly KCC) served as claims and noticing agent, maintaining the claims portal at veritaglobal.net/Wellmade. The claims agent role included sending notices to creditors, maintaining the claims register, and providing administrative support for the bankruptcy proceedings.

Hub Documents.

The most-referenced filings in the case were:

The DIP financing and sale/bidding procedures motions were the most-referenced documents. The bar date motion and wages motion also had multiple references.

Key Timeline

Compliance and Transaction Notes

The case involved labor trafficking allegations at the Cartersville facility and a chapter 11 filing on August 4, 2025. The company’s customers included The Home Depot, Floor & Decor, and Costco, and federal authorities described 60+ victims of “horrific” forced labor among 300 to 400 foreign nationals identified at the facility.

AHF IC purchased approximately $18 million of secured debt and later acquired the assets through a $40 million credit bid. The transaction proceeded while criminal cases against individual officers continued; no criminal charges were filed against Wellmade as a corporate entity.

The allegations described use of temporary visa programs, confiscation of travel documents, and working conditions that included 12-hour shifts, restricted movement, and unpaid chores, as described in the civil complaint and law enforcement statements.

The sale process used a stalking horse credit bid, with the sale order entered October 8, 2025 and the transaction closing on November 7, 2025.

Frequently Asked Questions

What triggered Wellmade's bankruptcy filing?

A federal raid by the FBI, ICE, and Georgia Bureau of Investigation on March 26, 2025 identified 300-400 foreign workers as potential labor trafficking victims and led to the arrest of three company officers on state felony charges. Although the factory reopened two days later, the company's prepetition lender NWB sold all Wellmade debt to AHF IC on May 20, 2025. When forbearance expired July 4, AHF IC scheduled a foreclosure sale. Wellmade filed bankruptcy on August 4—one day before the scheduled foreclosure—to stay the sale and move the process into bankruptcy.

What were the labor trafficking allegations?

ICE officials described 60+ victims of "horrific" forced labor among 300-400 foreign nationals—primarily Chinese workers—at the Cartersville plant. Workers had allegedly been promised high salaries and supervisory roles through temporary visa programs but upon arrival had travel documents confiscated, were subjected to 12-hour shifts six days a week, were not allowed to leave the factory or residence, and were required to perform unpaid chores at the owner's home. Former employees described overcrowded housing with approximately 12 people per house.

Who was arrested?

Three company officers were arrested on state felony charges of trafficking persons for labor or sexual servitude: owner Zhu "George" Chen (age 59, released on $200,000 bond April 8), his nephew Jiayi Chen (released on $200,000 bond April 8), and Jian Jun Lu (arrested April 5, $200,000 bond). No criminal charges were filed against Wellmade as a corporate entity.

Who acquired Wellmade's assets?

AHF IC, LLC—an affiliate of AHF Products, North America's largest hardwood flooring manufacturer—acquired the Cartersville facility through a $40 million credit bid plus assumed liabilities. AHF had purchased Wellmade's approximately $18 million secured debt from lender NWB on May 20, 2025, positioning itself as stalking horse bidder. The sale closed November 7, 2025.

What is AHF Products?

AHF Products, owned by private equity firm American Industrial Partners, is North America's largest hardwood flooring manufacturer with 11 manufacturing facilities (10 U.S., one Cambodia), four domestic distribution facilities, and 3,000+ employees. Brands include Bruce, Hartco, LM, tmbr, Capella, Homerwood, Robbins, Raintree, Autograph, and Emily Morrow Home. AHF originally acquired the hardwood flooring business from Armstrong Flooring for $100 million in December 2018.

What was the DIP financing structure?

Wellmade secured $4 million in DIP financing from SummitBridge National Investments VIII LLC to fund operations through the sale process. The interim order was entered August 7, 2025, with the final DIP order on September 2, 2025.

What is HDPC technology?

HDPC (High-Density Polymer Core) is Wellmade's patented rigid core flooring technology launched in 2017. Features include 100% waterproof construction, twice the hardness of solid hardwood, greater heat resistance, enhanced density, and resistance to dents and scratches. When launched, demand increased from approximately 100 containers per month to quadruple capacity within 90 days. Rigid core represents approximately 80% of the residential resilient flooring market.

What OSHA violations existed before the raid?

OSHA had cited Wellmade for nine violations since 2022, with fines totaling more than $72,000. Violations included amputation and entrapment hazards, flying chips and sparks, and potential hearing loss risks.

What is the status of civil litigation?

A civil lawsuit filed by Chinese nationals alleging violations of the Trafficking Victims Protection Act, Fair Labor Standards Act, and Georgia RICO Act became subject to the automatic stay during bankruptcy. The plaintiffs sought class action status for all Chinese nationals who worked at the facility since June 2020. A mediation order was entered November 19, 2025 directing the parties to mediation with a settlement judge.

How long was the sale process?

The sale process lasted 94 days from the August 4, 2025 filing to the November 7, 2025 closing. The stalking horse bidding procedures motion was filed August 8, bidding procedures were approved August 25, the sale was approved October 8, and the transaction closed November 7.

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