The Container Store Group, a retailer of organizing solutions, custom spaces and in-home services, will implement a recapitalization transaction to bolster its financial position, fuel growth initiatives and drive enhanced long-term profitability. To effectuate the transaction, The Container Store and certain of its subsidiaries filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas on Dec. 22, 2024.
Throughout this process, the company will operate its business as usual. The company’s stores and website will continue to operate as normal.
At least 90% of the company’s term loan lenders have entered into a transaction support agreement, pledging their support for the in-court recapitalization which, among other things, will provide the company with $40 million of new money financing, at least $45 million of deleveraging, debt service relief and material maturity runway.
In addition, the company has modified its asset-backed lending facility to add $40 million in upsized capacity. The recapitalization is aimed to strengthening the company’s balance sheet and liquidity position to enable The Container Store to continue meeting its commitments to its partners, vendors and stakeholders without disruption. Pursuant to the transaction support agreement, the company has negotiated and solicited support for a pre-packaged plan of reorganization and expects to confirm the plan of reorganization within the next 35 days.
“The Container Store is here to stay. Our strategy is sound, and we believe the steps we are taking today will allow us to continue to advance our business, deepen customer relationships, expand our reach and strengthen our capabilities,” Satish Malhotra, president and CEO of The Container Store, said. “We are particularly excited about the future of our custom space offerings, which continue to demonstrate strength. I want to thank our incredibly talented employees for their continued dedication, our customers, partners and vendors for their support, and our lenders who clearly see the strong potential in our business. We intend to maintain our strong workforce and remain committed to delivering an exceptional experience for our customers while we execute this recapitalization and for many years to come.”
The company has filed a motion with the Bankruptcy Court that will allow it to make timely payments to vendors, suppliers and other trade creditors in full under normal terms for goods and services delivered both before and after the filing. Therefore, outside of its term loan lenders, the company’s other creditors (including its vendor and trade partners) will be unimpaired as part of the transaction. The Container Store will emerge as a private company, under the ownership of its Term Loan Lenders, with a healthy financial profile primed to drive long-term growth.
The Chapter 11 process does not include the Company’s Elfa business in Sweden, which continues to operate as usual.
The Container Store is advised in this matter by Latham & Watkins as legal counsel, Houlihan Lokey as investment banker, FTI Consulting as financial and communications advisor and A&G Realty as real estate advisor. The ad hoc group of the company’s term loan lenders are advised in this matter by Paul Hastings, Greenhill as investment banker and AlixPartners as financial advisor.
