Royal Custom Designs, a Chino-based manufacturer of high-end furniture to the biggest hotel chains in the United States — including President Donald Trump’s privately held hotels — may shed its entire workforce and file for bankruptcy protection after an Indiana bank cast doubt on a proposed turnaround plan.

The company will terminate 142 jobs and file for bankruptcy protection as early as this week if the owners can’t convince First Internet Bank of Indiana to approve its sale to an unidentified private equity firm that is consolidating furniture makers in the U.S., Jeffrey Sladick, president of Royal Custom Designs, said Monday, Feb. 10.

First Internet Bank spokesman Ryan Hecker declined to comment “out of respect for its customers’ privacy,” he wrote in an email.

As one of the nation’s largest Small Business Administration lenders, the bank is blocking the sale because it wasn’t satisfied Royal Custom Designs was “commercially reasonable,” Sladick claimed.

“This is perplexing, given that … independent sources confirm the liquidation value of the assets is significantly less than what the bank would receive in this deal,” he said. “A sale that preserves 142 jobs, keeps a U.S. manufacturer operating, and offers a better financial return than liquidation is, by any standard, the more commercially reasonable outcome.

“We believe the bank’s real motivation is to protect its SBA guarantee on the existing loan,” said Sladick of the $4.6 million loan with First Internet Bank. “They seem to believe … that the SBA would look more favorably on them pursuing a liquidation, even though that contradicts with the SBA’s mission of preserving jobs. This seems to be a fundamental misunderstanding, or perhaps a misapplication, of the SBA’s guidelines.”

Miryam Mora Barajas, a spokeswoman with the SBA’s regional office in Los Angeles, said that her agency’s policy is not to comment on individual loans or borrowers.

Sladick said it would be ironic if the bank were to use a government-backed SBA guarantee for a program created to help save jobs, to then destroy them by forcing U.S. hotels, including Trump Hotels, to source their furniture outside the U.S., including in China, Vietnam or Mexico.

In recent years, other hospitality furniture makers have either left California or filed for bankruptcy protection — leaving Royal Custom Designs as the last major supplier on the West Coast. Manufacturers who have disappeared from the West Coast landscape include Inglewood-based Lily Jack, which moved to Mexico, and Rancho Dominguez-based JL Furnishings, which filed for bankruptcy.

‘Working capital hole’

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Sladick said that he is appealing to executives in the hotel design group of the Trump Organization for their help in swaying a deal to sell Royal Custom Designs to the private equity firm after a “working capital” hole was left behind by the previous owners — Jack Sissoyev and Raya Trietsch, who founded the company in 1970.

Sladick and his investment group, Makers & Craftsmen LLC, acquired Royal Custom Designs in May 2023 after the previous ownership group of Sissoyev and Trietsch retired from the business.

While declining to elaborate on the specifics surrounding the “working capital” hole, Sladick said he hired turnaround experts who determined by December that the best option was to sell the company.  The working capital problem was not the result of anything that current owners caused, he said.

“It’s been heart-wrenching. It’s been a slow death. I would say, because what put us into this situation was not through mismanagement or poor decision-making. It’s a force that was outside our control,” he said. “Once we recognized it, we put everything we could into saving the company, bringing in experts to help us. We realized we were in a turnaround situation, and over the past six months, we’ve just seen that path get bleaker and bleaker to save it.”

Sissoyev didn’t respond to a request for comment through LinkedIn, and Trietsch couldn’t be located.

Last week, Sladick sent the Trump organization a letter pointing out that his company was being impacted by policy-making at the SBA. He asked the Trump organization to provide “confidence” to First Internet Bank that the sale of assets would be the best course of action to preserve jobs. 

Royal Custom Designs supplies luxury furniture to several of Trump’s chain of hotels in Las Vegas, Miami, Panama, Scotland, Waikiki and the former Trump International Hotel in Washington, D.C. The 263-room hotel in the Old Post Office Building was sold in 2022 to an investment group that now it operates as a Waldorf Astoria.

The privately held Chino manufacturer, which has annual revenue between $15 million and $25 million, also sold its couches, chairs, tables, armoires and other furniture to hotel brands including Hyatt, Marriott, MGM properties — including a renovation project with  MGM Grand in Las Vegas — Hard Rock hotels, and one of Walt Disney World Resort’s properties in Florida.