UPDATE: June 1, 2020: A judge with the U.S. Bankruptcy Court for the Eastern District of Virginia on Friday approved Pier 1's plan to wind down its retail operations and shutter all of its stores. Liquidation sales will begin as soon as stores shuttered due to the coronavirus reopen, and the company expects the process to conclude by the end of October.

As previously announced, Pier 1 will sell its remaining assets, including its IP and e-commerce business, through a court-led sale.

"This is not the outcome we hoped for when we began this process, and we are deeply saddened to move forward with winding down Pier 1," CEO and CFO Robert Riesbeck said in a statement. "We are incredibly grateful to everyone who has supported Pier 1 since the Company's inception nearly 60 years ago, including our committed associates, passionate customers and talented vendors."

Dive Brief:

• Pier 1 on Tuesday said it is seeking court approval to wind down its retail operations "as soon as reasonably possible" once stores are able to reopen after being shuttered because of the pandemic.

• In a court filing, the retailer said it plans to sell its inventory and remaining assets, which include its e-commerce business and intellectual property assets, through a court-supervised sale.

• In an effort to maintain its staff during the wind-down process, Pier 1 is seeking court approval to give severance and bonuses to current employees, according to the filing.

Dive Insight:

Under pressure from sales declines and market share lost to competitors like Wayfair, Amazon and TJX's HomeGoods, Pier 1 filed for bankruptcy protection in February. The company laid out a plan that included selling itself through the process, something analysts questioned the likelihood of even before the pandemic took hold.

CEO and CFO Robert Riesbeck said in court documents that the company in late 2018 hired Credit Suisse Securities to help seek out merger and sales proposals. The process continued through 2019, but ended without any "actionable proposals." And then earlier this year, with the help of investment bank Guggenheim Securities, Pier 1 contacted about 95 possible buyers and investors, of which 35 signed nondisclosure agreements when the company filed for bankruptcy.

On March 30, however, the company canceled a bankruptcy auction for its business and assets, "in light of recent world events related to COVID-19," according to Pier 1 attorneys. On Tuesday, the attorneys said Pier 1 was "left with no choice" but to wind down its retail operations.

"This decision follows months of working to identify a buyer who would continue to operate our business going forward," Riesbeck said in a statement. "Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down."

Like other nonessential retailers, Pier 1 was forced to shutter its stores following government-mandated closures that prevented it from successfully conducting going-out-of-business sales at the more than 450 locations it announced it would close at the beginning of this year. The company on Tuesday said its debtor-in-possession lenders have agreed to let Pier 1 overdraw the DIP facility by about $40 million to help it liquidate when stores reopen.

Pier 1 proposed an asset bid deadline of July 1, an auction date of July 8, and a sale hearing date of July 15.