Consignment Store Bankruptcy Leaves Customers Confused

In most bankruptcy cases, the process of filing a claim against a bankruptcy estate falls to traditional creditors. That often includes suppliers, lenders, and landlords. But in some unusual cases, consumers find themselves in the position where they hold a claim against a company that has filed for bankruptcy protection.

One of these unusual circumstances involves the Las Vegas consignment company, Colleen’s Classic Consignment. A long-time fixture in Las Vegas, Colleen’s Classic Consignment operated as a furniture consignment company until October of 2018. Before then, the company sold furniture owned by customers on consignment, which means they held the furniture in their showroom until it sold. After the sale, Colleen’s would then forward the sales proceeds to the owner. While this business relationship worked while Colleen’s was operating, the company’s bankruptcy filing has complicated things for its customers.

On October 30, 2018, Colleen’s filed for bankruptcy and closed their doors. This bankruptcy filing complicated things for their long-standing customers, as the company reportedly closed their doors while still in the possession of customer-owned furniture. In other cases, the company is also alleged to have failed to hand over proceeds of sales that occurred before the bankruptcy filing.

The circumstances are complicated by the protections offered to debtors in the bankruptcy process. Thanks to what is known as the automatic bankruptcy stay, all creditors of Colleen’s Classic Consignment were automatically barred from collecting on any debts. While this protection typically extends to traditional creditors, it also applies to customers who have their property held in consignment. The bankruptcy filing leaves customers will little options other than filing a claim for their property in bankruptcy court. In fact, the only public state made by the owner of Colleen’s Classic Consignment was through her attorney, who suggested that all customers discuss their options with a bankruptcy attorney. Outside of that suggestion, the counsel for Colleen’s Classic Consignment refused to make any further statements.

While this situation is likely frustrating for most of the customers involved, all is not necessarily lost. The consignment company filed for Chapter 11 bankruptcy, which involves reorganizing the business with the possibility of keeping the business alive. However, the fact that the shop has closed its doors since filing is not a promising sign. Even if the company fails to re-open, for the Chapter 11 bankruptcy to continue the consignment company must have a plan approved that will satisfy its creditors. That’s what makes engaging with bankruptcy counsel so important; any customer with a valid claim will get nothing if they don’t properly file the claim with the bankruptcy court.


Ultimately, Colleen’s Classic Consignment took advantage of the protections of a bankruptcy filing in order to keep the business together. If you are considering a Nevada bankruptcy, contact the experienced attorneys with Vohwinkel Law today. Our bankruptcy attorneys have an extensive record in help Nevadans get the financial fresh start they need. To discuss your options, contact Vohwinkel Law today for a free consultation.

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