Pier 1's bankruptcy filing may hold a silver lining for the struggling home-goods retailer
- Forth Worth, Texas-based home furnishings retailer Pier 1 Imports has filed for Chapter 11 bankruptcy.
- With its filing, Pier 1 noted that it is pursuing a sale.
- "Somebody believes in them, because they've convinced banks to give them nearly $260 million, which allows them to continue operating the business," Texas bankruptcy attorney Sid Scheinberg told Business Insider.
- Visit Business Insider's homepage for more stories.
Pier 1 Imports has filed for Chapter 11 bankruptcy, the home goods retailer announced in a press release on Monday.
Chapter 11 may sound like a dire prospect for any company, but Pier 1's filing may reveal a ray of hope for the future of the business. When it voluntarily filed for bankruptcy in the eastern district of Virginia, Pier 1 noted that it is pursuing a sale as it goes about shutting down 450 stores around the country.
Pier 1 didn't immediately respond to Business Insider's request for further comment.
Attorney Sid Scheinberg, who serves as the chair of the bankruptcy and creditors' rights section of Dallas law firm Godwin Bowman PC, said that it's a good sign that the retailer has obtained a $256 million debtor-in-possession financing from Bank of America, Wells Fargo National Association, and Pathlight Capital.
"Somebody believes in them, because they've convinced banks to give them nearly $260 million, which allows them to continue operating the business," Scheinberg said. "There's something there that's worthwhile to continue operating or get sold."
In its release, the company announced its intent to keep its stores and website "open and operating" throughout the bankruptcy proceedings, as well as to continue to "honor customer commitments," compensate employees, and pay vendors and suppliers.
The statement noted that Pier 1 "intends to conduct a court-supervised sale process and complete the sale through a Chapter 11 plan," with the deadline for "qualified binding bids" to be set around March 23. While those banks are setting themselves up to become more high-priority debtors - and thus get first crack at being paid off - they are also taking on risk with such a move.
While a retailer may file for bankruptcy with a buyer in mind, a judge can always throw those plans into flux by ordering the business to be sold at auction. With that in mind, Scheinberg said that it's interesting that the company has filed in Richmond, Virginia, rather than in its home state of Texas.
He added that a strategic filing can help clear the way for such a sale. He said that leases can often be the "worst debt" that a retailer accrues.
"I think the big reason they filed is they've got a lot more
- Polygon and Binance swoop in to rescue projects running on Terra
- Zomato to Grasim to Aditya Birla Capital — here are six stocks that brokerages say you should buy
- Elon Musk-owned Tesla jumps 35 spots up Fortune 500 list, goes from number 100 to number 65 in rankings
- Modi government’s itch to offload ₹40,000 crore Hindustan Zinc stake hints at a bigger deficit than initially anticipated
- Five things the Indian government has done to reduce the burden of inflation
- Delhivery IPO allotment
- Reliance Retail
- Bitcoin Mining
- Reliance JIO
- Best Deal on Smartphones
- Unacademy offline Classes
- Hubble Space
- 5G Phones Under Rs. 20000
- Paytm Market Value
- Reliance Industries
- Venus Pipes Tubes IPO
- Hiring in BEL
- Adani Green
- Paradeep Phosphates balance sheet
- Spam Calls in India
- Whatsapp Reaction