Dive Brief:
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On July 27, Judge Edward Morris in the U.S. Bankruptcy Court for the Northern District of Texas in Fort Worth will consider Tuesday Morning’s motion to convert its Chapter 11 filing to Chapter 7.
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The change means that the off-price retailer is officially opting to liquidate rather than reorganize. The company had already taken steps toward going out of business, following the court’s approval of its sale to Hilco Merchant Resources in May.
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Tuesday Morning, founded nearly 50 years ago, exited a previous Chapter 11 process in early 2021.
Dive Insight:
Tuesday Morning continues to operate online, and in a message to customers floats the idea of returning to brick-and-mortar retail.
“We understand that many of you are eagerly awaiting the opening of a physical store,” the company said. “We aren't ruling that out. Perhaps we should go back to our roots and open the first location in Dallas, where Tuesday Morning first began its journey.”
That seems unlikely. Earlier this year the company ran nearly 500 stores and was looking to close at least half of them. According to a court June 30 filing regarding its request to shift to Chapter 7, going-out-of-business sales at all stores would be wrapped up by the end of June, “which will conclude the Debtors’ retail operations.” In the filing, the company also notes that the debtors have “sold substantially all of their assets.”
In February this year Tuesday Morning of having “effectively eliminated” its operating liquidity, an early indication that the company would likely cease to exist once it exited bankruptcy this time around. Its filing last month, the company noted that its “secured creditors hold competing, unresolved liens against the sale proceeds.”
“They have filed numerous pleadings setting out their alleged entitlement to payment. Either the parties will reach a settlement, or the Court will decide these disputes,” the company said in the filing. “But neither outcome will leave behind any sale proceeds for unsecured creditors.”
