Judge Dismisses Ashley Stewart’s Bankruptcy Filing Amid Turmoil

UPDATE: A New Jersey bankruptcy judge has just dismissed the Chapter 11 filing of Ashley Stewart, Inc., a prominent plus-size women’s apparel retailer, citing a lack of proper authorization by its board members. This urgent development comes just days after the company sought protection from creditors on December 17, 2025, in an attempt to contest a controversial asset sale.

The ruling, delivered by Judge Stacey L. Meisel of the U.S. Bankruptcy Court for the District of New Jersey, underscores the critical importance of corporate governance in bankruptcy proceedings. The judge determined that the former board members who initiated the filing acted without the necessary authority, violating a state court order concerning board appointments.

This dismissal not only jeopardizes Ashley Stewart’s financial future but also unfreezes a contentious sale of its assets to G Ashley Inc., an entity alleged to be linked to former insider management. The company reported assets between $10 million and $50 million and liabilities ranging from $50 million to $100 million, raising concerns for both creditors and shoppers who rely on the brand.

The bankruptcy filing was intended to halt Wingspire Capital, Ashley Stewart’s primary creditor, from liquidating the company. The retailer claimed that the asset sale was marred by “insider misconduct” and undervalued its properties. However, the court’s decision now allows creditors to pursue their claims without the protections usually afforded by bankruptcy.

In court documents, Ashley Stewart indicated plans to initiate an adversary proceeding to nullify the asset sale, arguing that it was conducted inappropriately and excluded legitimate offers. Yet, with the bankruptcy filing invalidated, the path forward is increasingly uncertain.

As the situation unfolds, the former board and current operators of Ashley Stewart are likely to escalate legal battles over the company’s control. Creditors, now unshielded by bankruptcy protections, are poised to take action against the firm. All stores and the company’s website remain operational, but the looming threat of litigation casts a shadow over its future.

According to reports from Bloomberg Law, the dismissal was welcomed by Ashley Stewart’s current board, which had urged the court to reject the Chapter 11 case, accusing former board members of attempting to seize control of the company.

This development marks a significant chapter in Ashley Stewart’s ongoing struggle to navigate financial distress while maintaining its brand integrity. With court challenges on the horizon and an asset sale now back in play, the stakes have never been higher for the retailer and its stakeholders.

Stay tuned as we continue to monitor this developing story and what it means for Ashley Stewart’s employees, customers, and creditors.