FedEx has filed a lawsuit against Burke Decor, an Ohio-based e-commerce retailer, for unpaid bills totalling $1,680,076. The lawsuit, filed in federal court, accuses the company of failing to pay for shipping services since early 2023. Despite signing a new agreement in June 2023, founder Erin Burke had already accumulated significant debt by then, including weekly shipping expenses of up to $80,000. By 2024, these charges dropped significantly, with the first bill of the year amounting to just $226, and in July 2024, the charges ceased entirely.
Photo: Burke Decor.
The logistics giant is requesting the court to award damages for the full amount owed, plus 8 per cent interest and legal fees. As of now, Burke Decor has not responded to the lawsuit. This case adds to the legal issues surrounding Burke Decor, which is already involved in multiple lawsuits across Ohio, New Jersey, and California, as creditors and businesses seek to recover money from the company.
Burke Decor's troubles began in 2023 when several customers, including many designers, placed orders that never arrived. Customers who sought refunds were met with a lack of communication, with some reporting ignored emails and phone calls, voided checks, and unfulfilled promises of refunds. Behind the scenes, the company faced significant financial struggles. The end of the pandemic-driven home décor boom, combined with increased marketing costs due to changes in algorithms on Meta and Google, had placed the company in a difficult financial position.
As the situation worsened, Burke Decor's main lender, Ampla, cut off access to capital in late 2023, leading to a lawsuit from the lender in May 2024 over unpaid bills and alleged "fraudulent misrepresentations." The case was later dropped. Former employees of Burke Decor reported a company in financial distress, with operations shifting and costs being moved around to stay afloat, including switching freight companies in an attempt to avoid payment issues.
Although Burke Decor has not filed for bankruptcy, Erin Burke filed for Chapter 11 protection in 2024, citing debts ranging from $1 million to $10 million. The bankruptcy case, currently moving through California courts, is a complex matter, involving both business debt and personal financial issues. As part of her bankruptcy plan, Burke proposed that her mother provide $1.5 million to help settle a portion of the company's debts, which was accepted by the judge, although some creditors have objected to the plan.
The case also revealed that Burke Decor is under investigation by the Ohio Attorney General's Office for consumer protection issues, and a logistics provider, Metropolitan Warehouse & Delivery Corp., is suing the company and Burke herself in New Jersey. Despite the ongoing legal battles and customer complaints, Burke Decor remains operational and active online, with the site currently advertising a New Year's sale. The lawsuit from FedEx now places the company at the centre of an already complicated legal situation.
Source: businessofhome.com