To decrease its outstanding liabilities and bolster its total financial position, Tuesday Morning Corporation said in a statement that it has filed for Chapter 11 bankruptcy to pursue “financial and operational reorganization.” The retailer said it filed voluntary petitions in the United States Bankruptcy Court for the Northern District of Texas – Dallas Division to pursue the reorganization.
Chief Executive Officer Steven Becker said in the statement, “The prolonged and unexpected closures of our stores in response to COVID-19 has had severe consequences on our business. 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.”
Becker added, "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.”
Tuesday Morning foresees shuttering roughly 230 of 687 retail locations, with the store closure process set to occur during the summer. It has asked the bankruptcy court to give the go-ahead to close a minimum of 132 locations in phase one and ultimately the Phoenix distribution center that serves those locations.
The retailer said it received a commitment from its current lender group to offer $100 million in debtor-in-possession (DIP) financing. It also has to receive a commitment for as much as $25 million in further financing as mandated by the DIP agreement, which the retailer says it is “negotiating.”
As previously reported, Tuesday Morning was reportedly getting ready to file for bankruptcy after the closure of its retail stores due to the pandemic. The retailer, which was started in 1974 and is based in Texas, has roughly 700 locations throughout the nation. Tuesday Morning was running up against a Tuesday (May 26) deadline to repay debts from J.P. Morgan Chase Bank and other lenders, per securities filings.