The Container Store Files For Chapter 11 Bankruptcy
The Container Store has filed for bankruptcy protection but plans to continue operations as normal, the company announced Sunday night.
The storage-focused retailer filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas, according to a release.
The company is planning to recapitalize to work toward long-term profitability, the release said. It plans to continue operations as normal while it restructures.
The company has 102 stores across 34 states and Washington, D.C., with an average size of 24K SF, according to its investor relations website.
“The Container Store is here to stay,” CEO and President Satish Malhotra said in a statement. “Our strategy is sound, and we believe the steps we are taking today will allow us to continue to advance our business, deepen customer relationships, expand our reach, and strengthen our capabilities.”
The retailer has been battling cash flow shortages and increasing losses, in addition to competition from big-box stores like Target and Walmart, the Associated Press reported.
The New York Stock Exchange suspended trading for The Container Store two weeks ago for failing to stay at or above the average market capitalization of $15M.
A deal with the Beyond Inc., the owner of home goods retailers Bed Bath & Beyond, Overstock and Zulily, would have netted The Container Store a $40M cash infusion, but that fell apart last month while in advanced discussions, the AP reported.
At least 90% of The Container Store's term loan lenders entered into a transaction support agreement with regard to the recapitalization, which will be carried out in court, according to the release.
Those lenders pledged to provide $40M in fresh financing and at least $45M of deleveraging, debt service relief and maturity extensions. The retailer has also modified its asset-backed lending facility to add $40M in capacity.
The retailer said it expects to confirm its reorganization plan within the next 35 days. The filing does not include the company’s Swedish business, Elfa.
