After months of speculation about its ability to continue operating, Pier 1 Imports has filed for Chapter 11 bankruptcy protection as it pursues a sale of the business. The company also said it would complete the previously announced closure of up to 450 store locations in the process, which includes the closure of all its stores in Canada.
To date, Pier 1 has closed or initiated going-out-of-business sales at more than 400 locations and started the shut down of two distribution centers.
The company maintained that it entered into a Plan Support Agreement with a majority of its term loan lenders and is pursuing the sale of the company. To facilitate an orderly sale process and implement the PSA, Pier 1 indicated, the company and its subsidiaries commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Eastern District of Virginia. According to Pier 1, it has received a commitment of approximately $256 million in debtor-in-possession financing from Bank of America, Wells Fargo National Association, and Pathlight Capital. The company asserted that, after court approval, it expects the DIP financing, together with cash flows from operations, to provide ample liquidity to support continued operations and the sale process as it proceeds in Chapter 11.
Pier 1 stores and the company’s online platform are open and operating, the company noted, and it expects to operate in the normal course during the bankruptcy process. The retailer has filed customary first day motions that, once approved by the court, will permit it to transition operations into a Chapter 11 footing, allowing it to pay wages and benefits, and honor customer commitments in the ordinary course of business. Pier 1 added that it would continue paying vendors and suppliers in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.
Robert Riesbeck, Pier 1’s CEO and CFO, said, “In recent months, we have taken significant steps forward in our business transformation and cost-reduction initiatives. We have worked to establish an appropriately sized and profitable store footprint, operating structure and merchandise assortment that will enable Pier 1 to better serve our customers across store and online channels. Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale of the company. We are moving ahead in this process with the support of our lenders and are pleased with the initial interest as we engage in discussions with potential buyers.”