Pier 1 Imports filed for Chapter 11 bankruptcy protection today and is pursuing a sale of the company, per an agreement with a majority of its term loan lenders, according to a statement.
The bankruptcy was filed in the U.S. Bankruptcy Court for the Eastern District of Virginia, the home furnishings retailer noted.
Pier 1 Imports has already garnered interest from potential buyers, according to Robert Riesbeck, the company’s CEO. In a statement, the company said it expects the deadline to submit bids will be on or around March 23. Guggenheim Securities is providing financial advice during the process, while AlixPartners is serving as the restructuring adviser.
The retailer also plans to use the Chapter 11 process to complete the previously announced closure of 450 stores, which includes all of its locations in Canada. Thus far, Pier 1 Imports has closed or initiated going out of business sales in more than 400 locations, and is also shuttering two distribution centers.
The company did not respond to a request for comment.
“In recent months, we have taken significant steps forward in our business transformation and cost-reduction initiatives. We have worked to establish an appropriately sized and profitable store footprint, operating structure and merchandise assortment that will enable Pier 1 to better serve our customers across store and online channels,” Riesbeck said. “Today’s actions are intended to provide Pier 1 with additional time and financial flexibility.”
The retailer has received a debtor-in-possession financing commitment of $256 million from Bank of America, Wells Fargo and Pathlight Capital. Pending court approval, the financing in combination with cash flow from operations is expected to provide enough cash to fund operations and the sale of the company through the Chapter 11 process, the company said.
Pier 1 Imports will continue to serve customers and pay vendors and suppliers for all goods and services provided either on or after the bankruptcy filing. In addition, the company is commencing bankruptcy proceedings in Canada in connection to closing all of its stores there. A&G Realty Partners, which landlords are encouraged to contact, is assisting Pier 1 Imports with the previously announced store closures and lease modifications.
The retailer had been pegged as distressed and in danger of filing for bankruptcy by credit rating agencies Fitch, Moody’s and S&P. The home furnishings seller was fighting “tooth and nail” for survival, according to Sarah Wyeth, lead analyst for retail and restaurants at S&P, who spoke to Adweek in late January. Back in early January, Moody’s downgraded Pier 1 Imports due to its worsening financial condition.
In Moody’s view, the company would be unable to refinance the loan at par and could end up defaulting. The retailer had an Ebitda loss of about $230 million for the 12 months ended Nov. 30, the ratings firm noted, and revenue of $1.4 billion.
Even though planned store closures and cost-cutting would reduce the company’s cash burn, Pier 1 Imports would continue to suffer losses, said Moody’s retail analyst Raya Sokolyanska at the time of the downgrade. She added that a bankruptcy would allow Pier 1 Imports to reduce debt and exit or renegotiate leases, which would help it avoid liquidation.
Pier 1 Imports was founded in 1962 and is an omnichannel retailer of home decor and accessories. The retailer said it had about 930 stores in the U.S. in addition to its online store.
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