The Container Store Group Inc. filed for Chapter 11 bankruptcy late Sunday after facing multiple business and financial challenges.
Looking to position itself for the future, the Coppell-based retailer plans to shore up its balance sheet, target growth initiatives, in an effort to bolster its long-term profitability, according to a statement. The Container Store expects to confirm a plan of reorganization within 35 days and “emerge shortly thereafter, positioned for sustainable growth,” it said.
The retailer will continue to operate its business “as usual” and will continue to provide products and in-home services to its customers without disruption, the company said. Customer deposits and orders will be honored and delivered as normal. Stores also will continue to operate as normal.
“The Container Store is here to stay,” said Satish Malhotra, CEO of The Container Store. “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 Container Store, founded in 1978, has over 100 locations nationwide – and offers more than 10,000 products. Yet the company has struggled to attract more dollars from customers amid growing competition from rivals, including online, losing millions and watching as its share price plummeted into penny stock territory.
In May, the company announced it had initiated a review process to evaluate strategic alternatives, which generally includes a possible sale. Earlier this month, the New York Stock Exchange moved to delist the company and then its stock was traded on the OTC Pink Market.
Under the plans that were announced Sunday, at least 90% of the company’s term loan lenders have entered into a transaction support agreement. That paves the way for in-court recapitalization that will provide the company with $40 million of new money financing.
“We intend to maintain our strong workforce and remain committed to delivering an exceptional experience for our customers while we execute this recapitalization and for many years to come,” Malhotra said.
The Chapter 11 process doesn’t include its Elfa business in Sweden, as that continues to operate as usual. Elfa provides a premium customizable storage system.
