Text compiled from court documents
May 27, 2020
Tuesday Morning Files Chapter 11
133 stores closing in First Wave
Due to the COVID-19 pandemic, the Debtors have faced unprecedented challenges including rapidly declining sales at their retail locations. To address those challenges the Debtors’ management team, in the exercise of their sound business judgment and in consultation with their advisors, ultimately determined that it is appropriate to close and wind down certain store locations (the “Closing Stores”) to increase liquidity, maximize cost savings, and strengthen the Company’s overall financial position.
There are 133 Stores expected to be closed beginning June 1, 2020 (the “Wave 1 Closing Stores”).
Further, the Debtors’ management team and advisors continue to evaluate whether certain of the Closing Stores should instead remain open and whether additional stores beyond the Closing Stores should be closed. The determination of the final number of stores to close will depend on, among other considerations, whether the Debtors are able to negotiate more favorable lease terms and rent reductions for certain stores with their landlords (the “Lease Negotiations”).
The Debtors have retained A&G Realty Partners, LLC (“A&G”) to assist with the ongoing Lease Negotiations. The Debtors reserve the right to add or remove stores from that list in the exercise of their reasonable business judgment and depending on the outcome of the Lease Negotiations, subject to entry of the Interim Order or the Final Order, as applicable.
In formulating the list of Closing Stores, the Debtors considered, among other factors, historical store profitability, recent sales trends, the geographic market in which the store is located, the potential to realize negotiated rent reductions with applicable landlords, and specific circumstances related to a store’s performance. In identifying the Closing Stores, the Debtors also considered individual store performance as well as geographic considerations by comparing relative performance of applicable stores against the Debtors’ remaining portfolio and analyzing the relative sales trends in its various geographic markets. In order to maximize the value of their estates, the Debtors may need to close additional stores during the Chapter 11 Cases not identified in the Consulting Agreement (such stores, the “Additional Closing Stores,” and together with the Closing Stores, the “Stores”).