For the second time in three years, Tuesday Morning has filed for Chapter 11 bankruptcy protection, citing the need to reduce its financial liabilities — including exiting some of its leases and ridding itself of in-house distribution — to transform itself into "a nimbler retailer that serves heritage markets in a profitable manner."
The Dallas-based home goods and decor chain with nearly 500 stores throughout the United States filed for Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth division on Tuesday, marking the company's second bankruptcy filing in the past three years. Tuesday Morning last exited from Chapter 11 bankruptcy proceedings in December 2020.
The retailer has been grappling with financial troubles in the past year even after a capital infusion of $35 million by a Retail Ecommerce Ventures-led special acquisition vehicle and senior leaders.
In its latest bankruptcy filing, Tuesday Morning has secured a commitment from Invictus Global Management LLC to provide $51.5 million of debtor-in-possession financing to support its ongoing operations during the proceedings. That financing is subject to approval by the bankruptcy court.
"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," said Tuesday Morning CEO Andrew Berger, who has been at the helm of the company for about four months, in a statement.
"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," Berger added. "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."
Invictus, an Austin, Texas-based investment firm, is fully supporting Berger and his leadership team as they guide the company through the bankruptcy process to lay a foundation for a brighter future, said Amit Patel, a partner at Invictus, in a statement. The firm is expected to play "an important role" in the reorganization, Patel added.
Tuesday Morning aims to use the bankruptcy court to close stores in low-traffic regions, focusing on its core and heritage markets, officials said, adding the company, which has already closed one of its hometown stores in Dallas, "believes this targeted approach to winding down unprofitable and underperforming stores will position Tuesday Morning to emerge from bankruptcy with a profitable, cash-generating store fleet" that serves its most loyal customers.
Tuesday Morning also expects to pivot to using a third-party logistics operator rather than using its own supply chain to further realize significant cost reductions, officials said. Other retailers have recently decided to make similar moves, impacting certain markets.
Tuesday Morning estimates it has 1,000 to 5,000 creditors, with estimated liabilities of $100 million to $500 million. The retailer lists its estimated assets at $100 million to $500 million, according to the bankruptcy filing. The creditors with the 40 largest unsecured claims and are not insiders are listed as trade vendors.
First-day hearings for the bankruptcy case are scheduled for Wednesday.
For the Record
Munsch Hardt Kopf & Harr PC is Tuesday Morning's legal counsel. Vinson & Elkins LLP is the legal adviser to Tuesday Morning's special committee. Piper Sandler is the financial adviser for the retailer.