Tuesday Morning Corp. announced in a news release on Tuesday that it has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division.
The Dallas-based retailer (OTC: TUEM) of home goods and decor is seeking the financial and operational reorganization as a means to shore up outstanding liabilities, obtain capital and evolve into a "nimbler retailer that serves heritage markets in a profitable manner," the release stated.
Part of the restructuring process is set to include closing stories in low-traffic regions as Tuesday Morning pursues the optimization of its footprint and a focus on core and heritage markets.
The company currently operates 487 stores in 40 states.
Tuesday Morning is also looking to reduce costs and create efficiencies across its distribution channels through its focus on high-performing stories. That streamlining is expected to include a pivot to a third-party logistics model and transition to a more cost-effective inventory acquisition strategy.
“After considering how best to address Tuesday Morning’s exceedingly burdensome debt, we have determined that the best path to reorganizing and transforming the Company begins with a Chapter 11 filing. Fortunately, we have the support of a committed capital provider in Invictus and a clear vision for transforming into a focused retailer that serves its core, heritage markets in a profitable manner," said Chief Executive Andrew Berger, who came into the lead role in November, in a prepared statement.
We look forward to taking steps that enable us to emerge as a stronger retailer that draws on a legacy of offering a unique off-price value proposition to our loyal customer base. We appreciate all the support of our employees, customers, creditors and other partners as we seek to sustain commercial operations with minimal disruptions,” Berger continued.
Invictus Global Management, which is headquartered in Austin, has also committed to provide $51.5 million of debtor-in-possession financing to support ongoing operations at Tuesday Morning during the proceedings. The DIP financing is subject to approval of the bankruptcy court.
“We look forward to playing an important role in reorganizing and transforming Tuesday Morning," said Amit Patel, partner at Invictus.
"As a Texas-based investment firm with strong roots in the state, we have long admired Tuesday Morning’s strong connection to customers seeking unique home goods at competitive prices. Andrew and his leadership team have our full support as they guide the Company through this process and lay a foundation for a brighter future,” he added.
Tuesday Morning has selected Munsch Hardt Kopf & Harr as legal advisor and Piper Sandler as financial advisor. Vinson & Elkins is advising Tuesday Morning's special committee.
The retailer previously emerged from Chapter 11 bankruptcy in 2021, funded through the net proceeds from a $70.25 million sale-leaseback of the company’s headquarters and warehouse facilities, a $110 million senior secured credit facility, proceeds from a $40 million equity rights offering and proceeds from a $25 million senior subordinated notes.
In September, Tuesday Morning entered an agreement to secure $32 million in convertible debt financing from a special purpose vehicle formed by Florida-based Retail Ecommerce Ventures.
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