The Coppell-based company filed for Chapter 11 bankruptcy protection in late December.
COPPELL, Texas — This article was originally published by our content partners at the Dallas Business Journal. You can read the original article here.
The Container Store Group Inc. is getting ready to exit bankruptcy only a month after filing for Chapter 11 protection in late December.
The Coppell-based retail chain secured court approval on Jan. 24 for a mass restructuring plan to make the business private by exchanging lender debt for equity. United States Bankruptcy Judge Alfredo Perez confirmed the plan, which would cut nearly $88 million in debt and inject $40 million in fresh capital, according to court documents.
The restructuring is supposed to preserve 3,800 jobs and maintain vendor relationships but would wipe out the equity of existing shareholders — which is common in bankruptcy.
Lenders supporting the deal include Golub Capital LLC, LCM Asset Management LLC and Glendon Capital Management LP, Bloomberg reported citing a December court filing.
The company known for selling home storage products would be valued at between $184 million and $216 million after the restructuring. Bankruptcy filings in December showed the Container Store (NYSE: TCS) to have estimated assets of $100 million to $500 million, and estimated liabilities of $100 million to $500 million.
In the court hearing, Judge Perez overruled objections made by the U.S. Justice Department and the Securities and Exchange Commission, Reuters reported. The groups opposed the third-party releases in the deal’s legal protections, which protect certain parties involved in the bankruptcy from future lawsuits or legal troubles related to the company’s financial troubles. Third-party releases have been under scrutiny since a June U.S. Supreme Court ruling said the releases are only valid if truly consensual.
The releases have generated controversy since U.S. federal bankruptcy law does not define “consent.” However, Perez said that the company’s restructuring plan followed the legal framework properly because it gives involved creditors a clear and fair choice to “opt-out” of agreeing to them.
The Container Store was founded in Dallas in 1978. Led by CEO Satish Malhotra, it reported $196.6 million in net sales in the second quarter of fiscal 2024 across more than 100 locations. The chain took a hit during the coronavirus pandemic — while home sales initially soared during the pandemic, they have slowed significantly in recent years, putting a dent in the company’s sales of its household organization items such as customizable closet organizers, shelves and kitchen items.
