Christmas Tree Shops has filed for Chapter 11 bankruptcy protection and announced plans to close 10 stores.
Parent company Handil Holdings also filed for Chapter 11 protection.
Christmas Tree Shops stated financial restructuring will reduce the company’s debt, better aligning its balance sheet with current market conditions given slowing consumer demand fueled by inflationary pressures and increased interest rates.
Handil Holdings, which acquired the Christmas Tree Shops from Bed Bath & Beyond in 2020, has made a series of operational improvements to the business, the parent company noted. The changes include bringing in experts to improve operational efficiencies and inventory management; creating a new stand-alone modern IT environment; attracting top talent to build independent HR and finance departments; developing and implementing a new store prototype; introducing a customer loyalty program; and other branding initiatives, Handil asserted.
Christmas Tree Shops hopes to complete its financial restructuring and emerge from Chapter 11 before the end of August. In conjunction with the filing, the company received a commitment for up to $45 million in debtor-in-possession financing from Eclipse Business Capital SPV LLC and ReStore Capital LLC, subject to court approval. The commitment will provide Christmas Tree Shops with sufficient financing to maintain normal business operations during the Chapter 11 process and help ensure the company continues to satisfy its ongoing business obligations, including the timely payment of employee wages and post-petition goods and services.
The retailer is seeking court permission to close up to 10 underperforming stores of the 83 now in operation. Christmas Tree Shops maintained many employees in those stores will be offered positions at other of its locations where there is a geographical match. The company is not considering other layoffs at this time.
“After careful consideration, we determined that availing ourselves of the Chapter 11 process was the best way to address our burdensome liabilities,” said Christmas Tree Shops Chairman Marc Salkovitz. “This is strictly a financial restructuring. Our operations are sound. By increasing our financial flexibility, we will be able to focus on continuing to delight our loyal customers with a wide selection of unique goods at affordable prices. We continue to believe that given its storied history and strong customer loyalty, CTS has tremendous potential, and we remain committed to the long-term success of the business. With the protections afforded by the Bankruptcy Code and the financing provided by our lenders, we will be able to satisfy our ongoing obligations to customers, vendors and employees.”
