Dive Brief:
- Christmas Tree Shops plans to liquidate and close all of its stores if it can’t find a buyer, according to court filings last week. The home decor and discount gift retailer sought Chapter 11 protection in May with plans to stay in business after closing about 10 stores.
- Christmas Tree Shops received a $45 million bankruptcy loan, but acknowledged that it defaulted on the loan. The lenders notified Christmas Tree Shops of the default on June 21 and planned to cut off access to funding on June 28.
- The company's lenders said they would provide limited financing if Christmas Tree Shops was able to enter into an asset purchase agreement by Wednesday and secure a $5 million deposit by Thursday. A sale process is ongoing, but the company does not believe any interested parties will be able to meet that deadline. If they don't, the company plans to liquidate its approximately 70 remaining stores.
Dive Insight:
Christmas Tree Shops said macroeconomic factors, including the continued impacts of COVID-19 on retail, along with limited business liquidity, forced the company into bankruptcy.
At the time of its bankruptcy filing, the company had 82 brick-and-mortar stores in 20 states, $50 million to $100 million in liabilities, up to $50,000 in assets and up to 49 creditors, with the top six creditors owed more than $1 million each. Christmas Tree Shops also said in court documents that it had $544 million in revenue in 2022 but a negative EBITDA of $45 million.
Christmas Tree Shops acknowledges that it defaulted on its debtor-in-possession loan. The Massachusetts-based retailer further acknowledged in court documents last week that it would be unable to remedy the defaults before June 28.
Now, the company is looking to engage a stalking horse bidder. Christmas Tree Shops in late May retained SSG Capital Advisors to assist with identifying potential investors or buyers of the retailer’s assets. Christmas Tree Shops said in court documents that it intends to name a stalking horse bidder or inform the court that it did not receive one by Friday, and an auction is tentatively set for July 19.
According to court documents, SSG contacted 350 parties; 29 entered non-disclosure agreements. Other parties are expected to also agree to confidentiality to review the company’s data ahead of a possible buyout of some or most of the company’s assets.
“Several interested parties have expressed an interest in acquiring substantially all of the Debtors’ assets as a going concern,” according to a motion to approve bidding procedures filed in the U.S. Bankruptcy Court in Delaware.
Christmas Tree Shops began in the 1950s as a seasonal gift shop near Cape Cod. Bed Bath & Beyond – which is now also attempting to liquidate and go out of business after filing for Chapter 11 – bought Christmas Tree Shops in 2003 and sold the business to Handil Holdings in 2020.
