Company Overview and Filing
Artstock, doing business as Artist & Craftsman Supply, filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Maine on December 21, 2025, citing economic headwinds and unyielding lending restrictions. The Portland-based retailer operates 18 brick-and-mortar store locations across multiple states and maintains an online presence serving customers with fine art materials, children's art supplies, school materials, novelty items, and related products.
Founded in 1985 as a small art supply store in Portland, Maine focused primarily on fine art materials and serving local artists, the company began expanding its retail footprint beyond its original store starting in the mid-1990s. Over time, it grew into one of the largest independent art material retail chains in the United States. The filing was supported by a declaration from the company's Chief Financial Officer submitted to the court on December 21, 2025.
Financial Structure and Secured Debt
The company enters bankruptcy with secured debt owed to two lenders. Cambridge Savings Bank holds approximately $1.5 million in secured debt against substantially all assets under a revolving line of credit facility established on October 7, 2022 that provides up to $4 million in total availability. The bank filed a UCC Financing Statement on the same date to perfect its security interest.
The Small Business Administration holds approximately $1.9 million in secured debt against all tangible and intangible personal property of the debtor under a loan agreement executed on May 19, 2020 for a principal amount of $2 million. The SBA filed a UCC Financing Statement on June 1, 2020 and filed a continuation statement on May 23, 2025. Importantly, the SBA has subordinated its security interests to those of Cambridge Savings Bank.
Operations and Workforce
Employee Structure
As of the petition date, the company employs 138 people, consisting of 119 full-time employees and 19 part-time employees. The workforce is divided into 107 hourly employees and 31 salaried employees who hold various positions related to operations, accounting, sales, inventory management, and shipment fulfillment.
Payroll and Compensation
Employees are paid on a weekly basis every Friday for services provided during the preceding one-week period from Monday to Sunday. Funds required to satisfy payroll obligations are drawn from the company's accounts on Thursday of each week. The first post-petition payroll disbursement date is December 26, 2025, with funds anticipated to be drawn on December 24, 2025 due to the Christmas holiday falling on December 25, 2025.
Average gross wages total approximately $115,000 weekly, comprised of approximately $65,000 for hourly employees and $50,000 for salaried employees. When employer-side payroll taxes are included, total weekly compensation obligations reach approximately $123,500. Payroll is funded and managed through ADP as the payroll company, which receives a monthly service fee averaging $3,267 per month.
Employee Benefits
The company provides eligible employees with health insurance through Bavvy, with the employer funding 60 percent of premiums. Dental and vision insurance is provided through Cigna Insurance, also with 60 percent employer contribution. Life insurance through Mutual of Omaha provides $50,000 in coverage for eligible employees, with anything extra at the employee's expense.
Voluntary plans available through Colonial Life at the employee's expense include short-term disability, cancer insurance, accident coverage, and additional life insurance. Effective January 1, 2026, new voluntary plans through Mutual of Omaha will become available for critical illness, accident insurance, and hospital indemnity coverage. The company also maintains a 401(k) program, though it currently provides zero percent matching of employee contributions. Additionally, the company reimburses eligible employees for purchases made on behalf of the company in the ordinary course, funded through accounts payable on a de minimis basis.
Cash Management System
The company operates what it describes as a complex and well-developed cash management system that enables the collection and disbursement of cash in an efficient, controlled, and well-organized manner across its stores. The system consists of multiple accounts located at Cambridge Savings Bank and other financial institutions, including various store-specific deposit accounts.
One account functions as a lockbox at Cambridge Savings Bank for the receipt of payments from various sources. Prior to the bankruptcy filing, the lockbox was swept daily, with certain collected funds transferred to pay the revolving loan and other fees and amounts owed to Cambridge Savings Bank under various loan documents. These payments to Cambridge provided the company with additional availability under the revolving credit facility, which was used to fund operating and other expenses.
First Day Relief Sought
Bank Accounts and Cash Management
The company is seeking authority to continue using its existing cash management system and maintain existing bank accounts on an interim basis for approximately 30 days, and then on a final basis to the extent required thereafter. The company also requests authority to continue using business forms, including various check types, correspondence letterhead, purchase orders, and invoices, until depleted in the ordinary course.
The company seeks authority to deposit funds in and withdraw funds from all accounts, including through checks, wire transfers, automated clearinghouse transfers, electronic funds transfers, and other debits, and to treat the accounts as debtor-in-possession accounts until it is able to replace them with accounts at an authorized financial institution. The company is also seeking an order directing Cambridge Savings Bank to provide access to all accounts, including the lockbox, to enable the company to access revenues generated by normal business operations and disburse funds in accordance with its duties as debtor-in-possession.
Payroll and Benefits
The company seeks authority to pay and honor pre-petition obligations to employees, including wage and salary obligations, payroll fees, payroll taxes, and benefit obligations. However, the company explicitly stated it is not requesting authority to pay any employee an amount exceeding the priority cap established under Section 507(a)(4) of the Bankruptcy Code. The company also stated it does not seek to modify the amount of compensation paid to any insider through this relief.
Cash Collateral Usage
The company seeks authority to use cash collateral in accordance with a budget to be submitted to the court. The proposed budget allows for aggregate disbursements up to 125 percent of projected amounts, providing flexibility for timing differences between projections and actual cash flows.
To provide adequate protection to secured lenders for the use of cash collateral, the company proposes several measures. First, it argues that the secured creditors' interests are protected by an increase in cash collateral value from the petition date during the relevant time period and through the use of cash collateral to maintain and preserve secured interests. Second, the company proposes to grant adequate protection liens and continuing liens. Third, to the extent these measures prove insufficient, any remaining unsatisfied adequate protection obligations would constitute allowed administrative claims under Section 507(b) of the Bankruptcy Code.
According to the declaration filed with the court, at least during the interim period, the ending balance of cash collateral equals or exceeds the beginning balance on the petition date.
Critical Vendors
The company has identified its credit card processors as critical vendors holding claims totaling no more than $65,000 for sales that occurred in the days before the bankruptcy filing. These processors facilitate approximately 95 percent of the company's total sales, both in physical stores and online, in exchange for service fees.
According to the filing, for approximately every 5 cents in charges incurred with the critical vendors for processing fees, the company generates revenue of the remaining 95 cents. The company argues that without the critical vendors' services, customers would not be able to purchase in-store or online with credit cards, causing the business to immediately collapse and revenue to plummet overnight. The company further states that although it may receive services from the critical vendors post-petition for a limited period, these vendors will likely cease providing further service unless their claims are paid in full.
Customer Programs
Gift Card Program
The company operates an active gift card selling and honoring program that encourages and allows customers to purchase prepaid gift cards. As of the petition date, the company estimates approximately $715,000 in outstanding gift card balances.
The filing emphasizes the importance of the gift card program during the holiday season, stating that customers and potential customers give or receive gift cards as holiday presents and other end-of-year gifts. The company argues that any cessation of its ability to honor and continue the gift card program at this time of year, coupled with the bankruptcy filing, would negatively impact its customer goodwill and reorganization efforts. The company's initial outreach to customers post-petition specifically references this motion and the company's commitment to honoring all gift card obligations during the case.
Customer Rewards Program
The company operates a rewards program for customers that allows them to benefit from repeat visits and multiple purchases through discounts on products in the form of rewards credits and other benefits. The program has approximately 120,000 members. The company seeks authority to maintain the program and honor all obligations, including any prepetition credits, rewards, points, or other obligations.
Discounts and Promotions
The company regularly runs discounts and seasonal promotions specifically intended to generate additional revenue notwithstanding the concession of a discount, including by encouraging more sales and customer loyalty. Although some promotions may technically pre-date the petition date, the company seeks to honor any promotions and discounts and related obligations.
Return and Refund Policies
The company operates industry standard return and refund policies that allow customers to return products and receive a credit or refund depending on circumstances, which may give rise to prepetition obligations. According to the filing, the company enjoys relatively minimal returns in the ordinary course, representing only approximately 1 to 1.5 percent of all sales, which the company describes as an indication of strong product offerings and customer relationships.
Insurance Coverage
The company maintains comprehensive insurance coverage necessary to operate its business and protect estate property. Workers' compensation insurance through Travelers covers employee workplace injuries. A commercial package through Travelers covers property and liability and is comprised of general liability insurance covering premises and operations liability and commercial property coverage for business physical assets.
Additional coverage includes commercial umbrella insurance through Travelers extending coverage of underlying policies, automobile insurance through Travelers covering company vehicles, and management liability policies through Hartford covering potential employment practices liability insurance and crime exposure, as well as through Great American covering directors and officers liability and fiduciary liability.
Case Status and Next Steps
The company continues to operate its business and manage its property as debtor and debtor-in-possession. As of the filing date, no operating trustee, examiner, or statutory committee has been appointed in the case by the Office of the United States Trustee.
The company seeks an expedited hearing and determination on its first day motions due to the time-pressing nature of the relief requested. The company argues that the requested relief is essential to maintaining business operations during the critical period immediately following the bankruptcy filing.
The bankruptcy case is proceeding in the United States Bankruptcy Court for the District of Maine under case number 25-20305. The declaration supporting the first day motions was filed on December 21, 2025.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 19 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.