See what’s being clicked on FoxBusiness.com.
Container Store filed for Chapter 11 bankruptcy protection on Sunday in an effort to save its business and ensure future profitability.
The move was expected by Wall Street analysts as the retailer’s financial woes continue to grow. The Texas-based company sells storage products and custom closets with 103 stores in 34 states and the District of Columbia.
Container Store said this does not mean the end of the retailer. The company entered bankruptcy court in the Southern District of Texas for its plans to “implement a recapitalization transaction to strengthen its financial position, advance its growth initiatives, and foster long-term profitability.” announced that it has filed for voluntary protection under Chapter 11.
At least 90% of the company’s lenders agreed to support the bankruptcy plan. This will give the company $40 million in new funding, reduce its debt by at least $45 million, ease debt repayments and extend its bankruptcy period. Pay off remaining debt.
Why The Container Store could be the next retailer to go out of business
The company said it would continue business as usual and provide products and in-home services to customers “without interruption.” The store and website will “continue to operate as usual.” The company also said that all customer deposits and orders will be honored and delivered as usual.
But a person close to the matter told FOX Business that the process “allows companies to renegotiate lease terms to align store space with market realities and business needs.” “If the company is unable to achieve significant rent reductions, it may be forced to close a select number of stores,” the person said.
January 3, 2020 at the Container Store outlet on Santana Row in Silicon Valley, San Jose, California. (Smith Collection/Gado/Getty Images)
“Container Store is here to stay,” CEO Satish Malhotra said, adding that the bankruptcy process will help the company move its business forward and strengthen its capabilities.
“We are particularly excited about the future of our Custom Space product, which continues to be a strength,” Malhotra said. “We remain committed to maintaining a strong workforce and delivering a great experience to our customers as we execute this capital restructuring and for years to come.”
BED BATH & BEYOND brand returns to physical stores
The retailer known for its organizational solutions quickly rose to fame with the success of Netflix’s Tidying Up series, which premiered in 2019.
Currently, the company is battling a downturn in the housing market and the increasing availability of cheaper alternative housing. Earlier this month, The Container Store stock was suspended from listing on the New York Stock Exchange as it prepares to be delisted after falling below the exchange’s continued listing threshold. The standard requires listed companies to maintain a global average market capitalization of at least $15 million for 30 consecutive business days.
A shopping cart at the Container Store in New York, November 4, 2013. (Jing Li/via Bloomberg/Getty Images)
Eric Snyder, a partner at New York City-based Wilk Auslander LLP, previously told FOX Business that the state of the housing market and increased competition “made this brick-and-mortar company…an unnecessary purchase.” spoke.
Snyder said the company doesn’t benefit from holiday sales because its products aren’t considered discretionary purchases, which makes the company’s woes worse.
“Given this, plus the loss of a $40 million lifeline from Beyond, bankruptcy and a quick sale are the only options,” Snyder said. Beyond Inc., which owns Bed Bath & Beyond and Overstock.com, has backed out of a deal to invest $40 million in Container Store Group as part of a new partnership.
CLICK HERE TO GET FOX BUSINESS ON THE GO
Beyond originally invested in the company and planned to use a section within the Container Store’s real estate stores to showcase its co-branded kitchen, bath and bedroom product assortment. But Beyond’s executive chairman, Marcus Lemonis, said last month that the company was concerned that The Container Store might not be able to reach an agreement with its lenders on terms that meet the financial needs of the deal. .
Latham & Watkins LLP served as legal advisor to The Container Store. Investment bank Houlihan Lokey served as financial advisor. FTI Consulting served as financial and communications advisor and A&G Realty served as real estate advisor.
