Zigi USA, LLC, a women's footwear wholesaler operating since 2008, has filed its Amended Combined Disclosure Statement and Chapter 11 Plan of Reorganization with the U.S. Bankruptcy Court for the Southern District of New York. The plan, filed on June 6, 2025, outlines a strategy for the company to continue operations while addressing approximately $19.7 million in debt, including $9 million in secured obligations and $10.7 million in trade and other unsecured claims.
According to the filing, Zigi USA's financial troubles stemmed largely from the COVID-19 pandemic, which triggered "diminishing revenues" as retail locations, including many of the company's wholesale customers, were shuttered for months. The company filed for bankruptcy protection on December 31, 2023.
"The result of this COVID-induced mounting revenue pressure is that the Debtor determined that commencing this Chapter 11 case is the most effective way to preserve and maximize the Debtor's value for the benefit of its creditors and stakeholders," the document states.
Under the proposed plan, the company will establish a General Unsecured Creditors (GUC) Trust to handle distributions to unsecured creditors. The trust will be funded with a $500,000 upfront payment from company principal Mr. Segev Davidson and an additional $500,000 in monthly payments from the reorganized company over time. Unsecured creditors are projected to recover between 30% and 45% of their claims, a significantly better outcome than the liquidation alternative analyzed in the plan.
"In the Debtor's opinion, the treatment of Claims under the Plan provides a greater recovery for Creditors than that which is likely to be achieved under other alternatives for the reorganization or liquidation of the Debtor," the filing states.
The plan classifies creditors into five categories:
- Class 1: CIT Group's secured claim, which will remain in effect and be paid in the ordinary course of business (unimpaired, 100% recovery)
- Class 2: 942P 1MD NY LLC's $100,000 secured claim, to be paid with 5% interest over 24 months (impaired)
- Class 3: FT Footwear's secured claim of $6,341,075.33, which will be subordinated to GUC Trust payments (impaired)
- Class 4: Unsecured claims of approximately $10.7 million, receiving 30-45% recovery through the GUC Trust (impaired)
- Class 5: Equity interests, which will be retained by current owners in exchange for funding the GUC Trust upfront payment and professional fee escrow (unimpaired)
A notable aspect of the reorganization is the transfer of litigation rights to the GUC Trust, specifically claims related to the loss of inventory at the company's Riverside, California warehouse on September 15, 2022. These litigation proceeds could provide additional recovery for unsecured creditors.
The plan also reveals that Zigi USA has begun relocating its manufacturing operations from China to other countries, including India and Vietnam, "due in no small part to the imposition of substantial tariffs on Chinese imports," according to the filing.
Mr. Yi Zhu of Foresight Restructuring LLC will serve as the GUC Trustee, while the company's post-confirmation management will continue to be led by Mr. Segev Davidson and Mr. Marc Bernard, the current Chief Operating Officer.
The plan requires court approval, and creditors in impaired classes will have the opportunity to vote on the plan. The company anticipates the effective date of the plan to be no later than 30 days after confirmation by the bankruptcy court.
Zigi USA is represented in the bankruptcy proceedings by Jacobs P.C., while the Official Committee of Unsecured Creditors is represented by Archer & Greiner P.C.
The case has been proceeding through normal chapter 11 processes since filing, including the appointment of a creditors' committee, approval of first-day motions, and obtaining debtor-in-possession financing of $1 million from Ex-Cell Limited. The bar date for filing claims was set as June 10, 2024, for general creditors and June 28, 2024, for governmental units.
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 100 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.