Tuesday Morning will pursue a financial and operational reorganization designed to allow the company to reduce its outstanding liabilities and strengthen its overall financial position. These actions are in response to the strain the COVID-19 pandemic and related store closures have put on the business.
To pursue this reorganization, Tuesday Morning filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Dallas Division.
Haynes and Boone is serving as legal advisor, Miller Buckfire, a Stifel company, is serving as financial advisor, and AlixPartners is serving as restructuring advisor to Tuesday Morning.
To enable the company to continue operations during the reorganization process, Tuesday Morning obtained a commitment from its existing lender group to provide $100 million of debtor-in-possession financing. As required by the DIP agreement, the company is required to obtain a commitment for up to $25 million of additional financing, which the company is negotiating.
Following the closure of the entire store portfolio as a result of COVID-19, Tuesday Morning has reopened more than 80% of its existing store footprint to date and expects to continue store reopenings over the coming weeks.
“The prolonged and unexpected closures of our stores in response to COVID-19 has had severe consequences on our business,” Steve Becker, CEO of Tuesday Morning, said. “Prior to the pandemic, we were gaining momentum in our merchant organization, growing our vendor base and improving brands, assortment and value for our customers, while investing in our technology and corporate leadership team. However, the complete halt of store operations for two months put the company in a financial position that can be effectively addressed only through a reorganization in Chapter 11.
“We plan to emerge from Chapter 11 in a stronger position as a leading home goods off-price retailer, providing unmatched value to our customers. The commitment from our lenders to provide access to significant capital demonstrates faith in our value-driven business model and iconic brand. Looking ahead, we’ve been encouraged by very positive performance of the business as we continue to reopen our doors and welcome back our dedicated customers.”
Tuesday Morning expects the reorganization process to enable the company to realign its store footprint. Following a store-by-store analysis with the help of its financial and restructuring advisors, the company expects to close approximately 230 of its 687 stores to focus on high-performing locations and will do this with a phased approach. The store closure process will take place over the summer. Tuesday Morning requested bankruptcy court approval to close at least 132 locations in a first phase and, eventually, the company’s distribution center in Phoenix. These stores were identified as underperforming or are situated in areas where too many locations are in close proximity.
Tuesday Morning plans to attempt to renegotiate a number of leases during this process. Of the remaining 555 stores, the company plans to exit approximately 100 additional locations, leaving a go-forward footprint of approximately 450 stores.
The Chapter 11 process is not expected to impact Tuesday Morning’s ability to reopen stores closed due to COVID-19 and the company will continue to do so in accordance with state and local mandates where the company operates.
Tuesday Morning is an off-price retailer specializing in products for the home, including upscale home textiles, home furnishings, housewares, gourmet food, toys and seasonal décor.
