The rise of the internet has helped create an explosion of small businesses.

“Entrepreneurs filed 5.2 million new business applications in the US in 2024, a 48.6% increase over 2019,” according to data from the U.S. Chambers of Commerce.

Most American businesses, are in fact, small businesses.

“Among the nearly 30 million registered businesses in the United States, fewer than six million have employees beyond the business owners,” according to a Census.gov report.

The internet made it easy to create products and sell them, but it’s not easy for an individual creator or small business to get eyes on their products. Etsy, as a retailer for people who make things, and Pinterest, as social media publicity for those creators have helped, but many small businesses still want to put their products in a brick-and-mortar setting.

Painted Tree, a network of 60 boutique shops that allowed small vendors to set up stores within their stores, has abruptly closed it doors and plans to file for bankruptcy.

Painted Tree closed unexpectedly

In many ways, Painted Tree worked like a brick-and-mortar Etsy. Creators leased space within a boutique and opened what the company referred to as “shops.”

“In an email reportedly sent to vendors on Tuesday (April 14), the chain said vendors had 10 days to remove their goods from stores,” KARK reported.

The email said the chain was preparing to file for Chapter 7 bankruptcy.

“The company confirmed that it is closed to the public and its last day of business was Monday, April 13. In a letter sent to shop owners, the boutique chain ordered vendors to immediately retrieve their merchandise following what it described as a sudden and permanent closure of all retail locations across the country, confirming it had stopped all business activity effective immediately and would no longer conduct retail sales at any location,” News 10 WBIR reported.

The company’s website and Facebook page make no mention of the closure or planned Chapter 7 filing. In addition, the chain’s TikTok, Pinterest, and Instagram pages have not been changed to reflect the shutdown.

Painted Tree owners are angry

Painted Tree shop owners took to the chain’s Facebook page to express anger over the abrupt closure.

“What they did was disgusting. they didn’t tell the vendors anything. When we got there, there wasn’t anyone watching our stuff. Anyone could have walked in there and walked out with any item they wanted. Any vendor could have gotten robbed yesterday,” wrote Joan Nell Velez Cole.

Some also shared how customers can reach them.

“Silver Springs Boutique is still online at Silverspringsboutique.net. Would love to have you follow us! To see all our new drops. 20 percent off your first purchase I will miss being at Painted Tree Boutiques, Kingwood, TX. Best of luck to all vendors and employees,” wrote Silver Springs Boutique.

That response was posted under a presumably automated Facebook post promoting an April 16 ladies night, which will now not be happening.

Some posters shared the sign that was posted on the door of their store, which read in part:

“It is with deep regret that we write to inform you that Painted Tree Boutiques has made the very difficult decision to cease all business operations today; Painted Tree will not be conducting any further retail sales at any location.”

Painted Tree offered vendors their own stores.

Shutterstock

Painted Tree Boutiques confirms the closure

The company released a statement, which was reported by CBS News, confirming the closure.

“This decision has not come lightly, and it represents the end of a chapter that has meant everything to us,” the company said. “To our shoppers – you have made every single day worthwhile. You came to us not just to shop, but to discover, to support local makers, and to find something truly one-of-a-kind.”

Vendors were told to remove all inventory by April 24.

If the chain files Chapter 7 bankruptcy, it’s a slightly different case because it does not own the inventory it sells. It does, however, collect rent and owe vendors for items previously sold.

More Bankruptcy:

• Key auto parts and services company files Chapter 11 bankruptcy
• Key travel brand files for Chapter 11 bankruptcy
• Self-driving-car company files for Chapter 11 bankruptcy protection

Vendors, or shop owners in this case, are seen as unsecured creditors and will likely not receive any money.

“In the typical no asset chapter 7 case, there is no need for creditors to file proofs of claim because there will be no distribution. If the trustee later recovers assets for distribution to unsecured creditors, the Bankruptcy Court will provide notice to creditors and will allow additional time to file proofs of claim,” according to the U.S. Courts.

Chapter 7 bankruptcy FAQ:

• What is Chapter 7 bankruptcy?: Chapter 7 is a liquidation bankruptcy where a trustee may sell a debtor’s nonexempt assets to pay creditors.
• Who handles the case?: A court-appointed bankruptcy trustee manages the sale of assets and distribution of funds.
• What happens to debts?: Most unsecured debts are discharged, meaning the debtor is no longer personally responsible for them after the case.
• Do creditors get paid in full?: Usually not. Creditors are paid in order of priority, and unsecured creditors often receive only a portion, or nothing.
• Does the business stop operating?: In many cases, yes. Chapter 7 is typically used to wind down and liquidate operations, not continue business. Source: U.S. Courts Bankruptcy Basics

Related: Comfort food chain forced into Chapter 11 bankruptcy