(Bloomberg) -- The Container Store Group Inc. has filed for bankruptcy to address mounting losses and a substantial debt load that has weighed on the chain.
The retailer, which sells closet organizers and storage bins, sought court protection Sunday in the Southern District of Texas, listing $243.1 million of secured debt, according to court documents.
The Coppell, Texas-based retailer comes to bankruptcy after Beyond Inc., the owner of Bed Bath & Beyond and other brands, questioned the retailer’s ability to complete a deal with lenders needed to satisfy a $40 million preferred equity injection. The New York Stock Exchange in December also moved to delist The Container Store’s common shares.
The company has already agreed a restructuring plan with its term lenders, which will provide $40 million in additional financing through the Chapter 11 process and will take control of the business at completion, it said in the filing.
Bloomberg News earlier reported that the company would seek bankruptcy protection with a plan in place for lenders to take over. Creditors had offered to provide The Container Store with additional capital before those discussions pivoted to restructuring talks, Bloomberg also reported.
The company, which has 104 stores in the US, expects to emerge from the bankruptcy process within two months, with full payment of all unsecured creditors, including vendors, service providers and employees, according to the filing.
Founded in 1978, The Container Store has struggled in the aftermath of the pandemic amid intensified competition and reduced consumer spending, leading to a 10.5% year-on-year drop in revenues in the third quarter, Chief Restructuring Officer Chad Coben said in the filing. It also faced “increased interest expenses and looming debt maturities,” he said.
--With assistance from Reshmi Basu, Janine Phakdeetham, Luca Casiraghi and Dana El Baltaji.
(Updates with details from the filing from second paragraph.)
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