Tuesday Morning Corp. has filed for Chapter 11 bankruptcy protection for the second time, in this case, the company reported, to pursue a financial and operational reorganization that will enable the company to reduce its outstanding liabilities, obtain significant and necessary capital, and ultimately transform into a nimbler retailer that serves heritage markets in a profitable manner.
The move follows an executive shakeup that occurred in November of last year when CEO Fred Hand retired and board director Andrew Berger took on his executive role and the initiation of a delisting process from Nasdaq in December.
Tuesday Morning filed voluntary Chapter 11 petitions for protection in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division. It has obtained a commitment from Invictus Global Management to provide $51.5 million of debtor-in-possession financing to support ongoing operations during the bankruptcy proceedings, the company reported.
In the restructuring process, Tuesday Morning maintained that it plans to optimize the store footprint, focusing on its core and heritage markets. The company intends to close stores in low-traffic locations while allocating the resources to remaining stores in high-traffic locales. Tuesday Morning asserted that a targeted approach to winding down unprofitable and underperforming stores will position it to emerge from bankruptcy with a profitable, cash-generating store fleet that serves its most engaged and loyal customers.
Tuesday Morning said it also plans to realize significant cost reductions and new efficiencies across its distribution channels by supporting a narrower set of high-performing stores. The company expects to transition to a third-party logistics, or 3PL, model and a more cost-effective inventory acquisition strategy.
According to a bankruptcy filing, Tuesday Morning reported it explored strategic alternatives before filing for Chapter 11 protection, including refinancing, recapitalization, restructuring of indebtedness, a sale of all or substantially all company assets of the company as a going concern, as well as liquidation. On January 27, the Tuesday Morning board of directors approved resolutions, formally delegating authority to a special committee formed on December 11, 2022, to evaluate strategic alternatives. That committee made the determination that Tuesday Morning should file for bankruptcy under Chapter 11.
Among the Tuesday Morning housewares and hard home decor companies among a list of top unsecured creditors reported in the bankruptcy filing are Home Essentials and Beyond, $1,072,000 in unsecured debt; Meyer Corp., $830,000; Azzure Home, $825,000; Enchante Accessories; $537,000; Lifetime Brands, $330,000; Tramontina USA, $302,000; Harry & David; $297,000; Stylecraft Home Collection, $271,000; and Sam Salem & Son, $231,000.
In announcing the bankruptcy filing, Berger stated: “After considering how best to address Tuesday Morning’s exceedingly burdensome debt, we have determined that the best path to reorganizing and transforming the company begins with a Chapter 11 filing. Fortunately, we have the support of a committed capital provider in Invictus and a clear vision for transforming into a focused retailer that serves its core, heritage markets in a profitable manner. We look forward to taking steps that enable us to emerge as a stronger retailer that draws on a legacy of offering a unique off-price value proposition to our loyal customer base. We appreciate all the support of our employees, customers, creditors and other partners as we seek to sustain commercial operations with minimal disruptions.”
Tuesday Morning currently operates 487 stores in 40 states. It entered bankruptcy initially in May 2020 and emerged in January 2021 having shed more than 200 of its 687 stores operated at the point when it entered Chapter 11.
