The Container Store files for bankruptcy

COPPELL, Texas — The Container Store, in business since 1978, filed for pre-packaged Chapter 11 bankruptcy protection in U.S. Bankruptcy Court for the Southern District of Texas yesterday, the latest retailer to fall victim to weakened consumer demand and economic pressures.

At least 90% of the company’s lenders will provide The Container Store with $40 million in new money financing, as well as $45 million in debt relief. The reorganization plan is expected to be confirmed in the next 35 days.

At the end of the bankruptcy process, the lenders will be the new owners of the company, and it will be a private company.

During the bankruptcy process, the business will continue to operate as usual, its stores and website will remain operational, and all customer deposits and orders will be honored and delivered as usual, the company said in a release. A recapitalization effort will allow it to continue meeting its commitments to its partners, vendors, and stakeholders, it added.

The Chapter 11 process does not include the Company’s Elfa business in Sweden, which continues to operate as usual.

“The Container Store is here to stay. 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,” said CEO and President Satish Malhotra.

“We are particularly excited about the future of our custom space offerings, which continue to demonstrate strength. I want to thank our incredibly talented employees for their continued dedication, our customers, partners, and vendors for their support, and our lenders who clearly see the strong potential in our business. We intend to maintain our strong workforce and remain committed to delivering an exceptional experience for our customers while we execute this recapitalization and for many years to come.”

Beyond Inc. in October said it would invest $40 million in The Container Store to establish a Bed Bath & Beyond nameplate presence in its physical stores, but a month later told investors it had concerns regarding the Container Store’s ability to secure financing from its lenders.

The Container Store is not the only retailer to struggle lately. Big Lots filed for bankruptcy in September, and last week said its acquisition agreement with Nexus Capital Management appeared unlikely to be completed.