Artstock d/b/a Artist & Craftsman Supply filed a Disclosure Statement on April 20, 2026 in connection with its Plan of Reorganization, proposing a restructured operating model anchored by 14 retail locations and projecting a 100% recovery for all classes of creditors. The filing was made in the U.S. Bankruptcy Court for the District of Maine, Case No. 25-20305.
Company Background and Business Operations
Artstock was founded in 1985 in Portland, Maine as an independent retailer of fine art materials, serving artists, students, and educators. Over the following decades, the company expanded its geographic footprint and broadened its product offerings to include children's art products, craft materials, and school supplies. The disclosure statement describes the company as one of the largest independent art materials retailers in the United States, with stores across multiple states and an online presence.
The company transitioned to employee ownership through an Employee Stock Ownership Plan (ESOP), which was terminated in 2025 due to operational costs and difficulties. All equity interests in the debtor are held by Artstock Holding Company, Inc.
Events Leading to Bankruptcy
On December 21, 2025, Artstock filed a voluntary Chapter 11 petition in the District of Maine. At the time of filing, the company was operating 18 stores nationwide. The debtor's secured debt at the petition date included approximately $1,346,370 owed to Cambridge Savings Bank under a line of credit (originally with a maximum borrowing capacity of $4 million, reduced to $2 million at the petition date); approximately $1,894,329 owed to the U.S. Small Business Administration; and $4,357,500 owed to Art Supply Enterprises under a settlement agreement for inventory purchases, measured as of December 31, 2025. The Internal Revenue Service also filed a tax lien of $85,872.21, though the debtor contends the lien is junior to all other secured creditors and that IRS claims will be treated as priority tax claims rather than secured claims.
Reorganization Strategy
Since the petition date, Artstock has implemented a series of operational and financial measures to reduce its cost structure. The company has closed or is in the process of closing four stores — in San Diego, Kansas City, Chestnut Hill (Pennsylvania), and Industry City (Brooklyn, New York) — and intends to continue operating the remaining 14 locations following plan confirmation.
Restructuring steps taken during the case include obtaining rent concessions and lease modifications from multiple landlords; reducing corporate overhead through a senior IT staff position elimination and a salary reduction for another senior staff member; renegotiating IT and software service agreements; and implementing tighter purchasing and inventory controls to preserve liquidity. The company has also transferred overstocked inventory between store locations to improve efficiency.
On March 4, 2026, the Bankruptcy Court entered a final order authorizing use of cash collateral, following multiple interim orders.
The Proposed Plan of Reorganization
The Plan proposes a restructured balance sheet to allow the company to continue operating as a going concern. The effective date is projected at approximately July 1, 2026. On the effective date, all assets of the estate vest in the reorganized debtor free and clear of claims and interests. The Plan projects a 100% recovery for all classes of creditors, with repayment structured as follows.
Treatment of Claims and Interests
Cambridge Savings Bank (Class 1): The secured claim, expected to be reduced to approximately $1,286,370 by the end of May 2026 based on ongoing payments, will be repaid on a 15-year amortization schedule with a balloon payment on the fifth anniversary of the effective date. Interest accrues at the prime rate plus 1%. Monthly payments are estimated at approximately $12,108.29. Cambridge Savings will also receive 20% of the debtor's annual Net Disposable Income, paid concurrently with distributions to general unsecured creditors, with the Class 1 claim re-amortized to account for any such additional payments.
SBA (Class 2): The approximately $1,894,329 secured claim will be repaid in accordance with the existing SBA loan documents, with the maturity date extended by 10 years and payments re-amortized over the extended term. No default interest, late fees, or other fees arising from a pre-effective-date default will be owed.
Art Supply Enterprises (Class 3): The $4,357,500 claim will be treated under a 20-year amortization schedule with a balloon payment on the seventh anniversary of the effective date, at prime plus 1%. The debtor asserts the claim is likely unsecured because the collateral securing it — inventory specifically purchased from Art Supply Enterprises — had been sold as of the petition date. The debtor also asserts that the claim may be held by a Chapter 7 trustee in a separate bankruptcy proceeding rather than by Art Supply Enterprises. To the extent the claim is determined to be fully or partially unsecured, it would be treated as a general unsecured claim in Class 7.
IRS Secured Tax Claims (Class 4): Deferred cash payments over a period not to exceed five years from the petition date, in equal annual installments with simple interest at the Federal Judgment Rate in effect as of the effective date.
Priority Wage Claims (Class 5): Satisfied in accordance with the debtor's pre-petition policies, capped at $17,150 per individual per the Bankruptcy Code. Amounts above the statutory cap are treated as general unsecured claims in Class 7.
Priority Non-Tax Claims (Class 6): Cash payment in full on the later of the effective date or the date the claim becomes allowed.
General Unsecured Claims (Class 7): Pro rata payments of 80% of Projected Net Disposable Income over a seven-year payment period. The first payment is due on or before January 31, 2027, with subsequent payments on each successive January 31st. The seventh and final payment includes any remaining outstanding amounts. Class 7 claims do not accrue interest. Art Supply Enterprises and an unsecured creditor identified as Adlerstein each entered into subordination agreements with Cambridge Savings prior to the petition date, requiring that any Plan distributions owed to them be paid directly to Cambridge Savings until its obligations are fully satisfied.
Equity Interests (Class 8): Artstock Holding Company, Inc. will continue as the sole equity holder post-confirmation. No equity distributions may be made until all other claims under the Plan are satisfied. (The disclosure statement is internally inconsistent in labeling this class: the body text identifies equity interests as Class 8, while the classification table on page 16 labels the same class as Class 9, with no Class 8 appearing in the table.)
Liquidation Analysis and Best Interests Test
The disclosure statement includes a liquidation analysis demonstrating that a Chapter 7 liquidation would produce materially worse outcomes for creditors than the proposed Plan. Based on projected conditions as of July 1, 2026, the analysis models a six-week store closing sale across the 14 locations:
Estimated beginning cash: $300,000
Estimated inventory liquidation sales: $3,589,740
Store closing costs (rent, payroll, exit costs, fees): $1,696,501
Chapter 7 trustee fees: $50,895
Net inventory proceeds: $1,842,344
Miscellaneous asset sales (shelving/displays, 14 stores at $1,000 each): $14,000
Total available cash: $2,156,344
After satisfying Cambridge Savings ($1,286,370) and the SBA ($1,894,329), the estate would face a deficit of approximately ($1,024,355), resulting in no recovery for general unsecured creditors. Store-level net cash proceeds in the liquidation scenario ranged from 34% to 67% of inventory value, with an aggregate recovery rate of 53% of inventory.
Avoidance Actions
In the 90 days prior to the petition date, the debtor made disbursements to trade creditors totaling approximately $4,720,866.15. Claims to avoid and recover those transfers may only be brought against parties who received more than $8,575 in aggregate during that period, per 11 U.S.C. § 547(c)(9). The debtor has not yet completed its analysis of potentially avoidable transfers, and the right to pursue avoidance actions is preserved under the Plan.
Key Dates and Deadlines
April 27, 2026: General Bar Date for filing proofs of claim (including 503(b)(9) claims)
June 19, 2026: Governmental Bar Date
~July 1, 2026: Projected Plan Effective Date
60 days after Effective Date: Non-Ordinary Course Administrative Claims Bar Date; Professional Fee Claims deadline
90 days after Effective Date: Claims Objection Deadline
January 31, 2027: First annual payment to Class 7 general unsecured claimants
5th anniversary of Effective Date: Cambridge Savings balloon payment due
7th anniversary of Effective Date: Art Supply Enterprises balloon payment due
All impaired classes are entitled to vote on the Plan. Acceptance requires two-thirds in dollar amount and more than one-half in number of voting claims in each class. The debtor reserves the right to seek confirmation under the cram-down provisions of 11 U.S.C. § 1129(b) if any impaired class rejects the Plan.
Professional Representation and Court Information
Court: United States Bankruptcy Court, District of Maine
Case Number: 25-20305
Presiding Judge: Honorable Peter G. Cary
Docket Reference: Doc 259, filed April 20, 2026
Counsel for Debtor: Bernstein, Shur, Sawyer & Nelson, P.A., Portland, Maine
Counsel for Official Committee of Unsecured Creditors: Verrill Dana LLP (authorized effective January 15, 2026)
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