Christmas Tree Shops files bankruptcy, lines up $45 million DIP loan

By Sarah Lizee

Olympia, Wash., May 8 – Christmas Tree Shops, LLC filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the District of Delaware with plans to restructure its debt.

The financial restructuring aims to reduce the company’s debt, better aligning its balance sheet with current market conditions that have been negatively impacted by slowing consumer demand fueled by inflationary pressures and increased interest rates, the company said in a press release.

“After careful consideration we determined that availing ourselves of the Chapter 11 process was the best way to address our burdensome liabilities,” chairman Marc Salkovitz said in the release.

“This is strictly a financial restructuring. Our operations are sound.

“By increasing our financial flexibility, we will be able to focus on continuing to delight our loyal customers with a wide selection of unique goods at affordable prices.”

The company hopes to complete its financial restructuring and emerge from Chapter 11 a financially stronger retailer before the end of August.

Christmas Tree Shops has received a commitment for up to $45 million in debtor-in-possession financing from Eclipse Business Capital SPV LLC and ReStore Capital LLC which, subject to court approval, will provide the company with enough financing to maintain normal business operations during the Chapter 11 process.

Interest on the facility is SOFR plus 775 basis points.

There is a 1% closing fee, a 0.5% commitment fee, an administrative fee of $7,000 per month, a 0.5% exit fee, and a $250,000 exit fee to ReStore.

The facility is set to mature on the earlier of Nov. 5, 2023 and the occurrence of a termination event.

The company is also seeking approval to use the cash collateral of its prepetition lenders.

The debtor has filed with the court a series of customary motions seeking to maintain business as usual operations.

The company also announced that as part of the restructuring process it will be seeking court permission to close up to 10 underperforming stores.

In its petition, the company listed 200 to 999 creditors, $50 million to $100 million in assets and $100 million to $500 million in liabilities.

Its largest unsecured creditors are Pedone & Partners, Inc., doing business as Luxe Collective Group, based in New York, with a $1.93 million operating expense claim, Everstar Merchandise Co., Ltd., based in Hung Hom, Hong Kong, with a $1.63 million merchandise claim, Metropolitan Trucking Inc., based in Bloomsburg, Pa., with a $1.15 million freight claim, Pacific Supreme, based in Bangkok, with a $1.11 million merchandise claim, and Commercial Traffic Co./CT Logistics, based in Cleveland, with a $1.05 million freight claim.

Murphy & King, PC and Troutman Pepper Hamilton Sanders LLP are general counsel to the company.

Middleborough, Mass.-based Christmas Tree Shops sells home goods with a specialty focus on seasonal products. The Chapter 11 case number is 23-10576.

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