The Container Store, the popular retail location for all things organizing, has announced plans to enter Chapter 11 bankruptcy protection.
In a news release, the company said it will start a recapitalization to help strengthen its financial position for long-term growth and profitability.
The Container Store currently has over 100 location nationwide plus an online retail presence.
The company plans to announce its reorganization plan within the next 35 days and emerge from Chapter 11 shortly afterwards. The recapitalization plan will include $40 million of new money financing from its lenders.
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During the Chapter 11 process, The Container Store plans to keep its stores open.
"Throughout this process, the Company will operate its business as usual and will continue to provide high-quality products and in-home services to its customers without disruption. The Company’s stores and website will continue to operate as normal; all customer deposits and orders will be honored and delivered as normal," the company said in the release.
Vendors will be unimpaired and will be paid in full, according to the company.
"The Container Store is here to stay," The Container Store's president and CEO, Satish Malhotra, said in a statement. "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."
The Texas company has faced increasing competition from retailers like Target and Walmart at the same time that demand for its goods is under strain in a rough housing market, where soaring prices and elevated mortgage rates have stunted sales.
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The filing arrives two weeks after the trading of company shares was suspended by the New York Stock Exchange. The Container Store Group Inc. failed to maintain an average market capitalization of at least $15 million in accordance with NYSE rules.
The company has struggled to raise cash, and last month an agreement with the owner of Bed Bath & Beyond, Overstock and Zulily that would have come with a $40 million cash infusion fell apart. The Container Store said in a regulatory filing that it did not believe that it could match the financing requirements of the partnership with Beyond Inc.
The Container Store was founded in 1978 by Garrett Boone, Kip Tindell and investor John Mullen, who opened the doors of The Container Store’s first location in Dallas, according to the company. Neither of the men, Boone with a master’s degree in history and Tindell who was an English major, expected a career in retail. Yet both were driven by the idea of creating a store devoted entirely to storage.
The chain had its skeptics when Boon and Tindell opened their first 1,600-square-foot location. Yet the chain expanded to more than 100 stores ranging from 12,000 to 20,000 square feet, according to the company.
Elfa, the company's business in Sweden, is not part of the Chapter 11 process.
