The Container Store Files for Bankruptcy, Plans to Privatize

Storage bins from the Container Store in New York on Dec.13, 2024. AP Photo/Cathy Bussewitz, File

The Container Store filed for bankruptcy protection on Sunday as the latest retailer to face business restructuring following mounting losses and cash flow shortages.

Based in Texas, the company operates more than 100 outlets nationwide along with an online store. A leading provider of organizing solutions selling more than 10,000 products, the company, via the bankruptcy filing, will implement a “recapitalization transaction” to improve its financial situation. The Container Store will not shut down operations but will “operate its business as usual,” said a Dec. 22 company statement, adding that “all customer deposits and orders will be honored and delivered as normal.”

Some of the company’s lenders have committed to investing $40 million and, at the end of the restructuring process, “will be the new owners” of the business, according to the company.

“We expect The Container Store to be a private company,” the company said in a website detailing the future of the enterprise.

The company filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas on Dec. 22.

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

The existing workforce will be retained while the recapitalization process is executed, said Malhotra. The process is expected to last 35 days.

The $40 million of new financing will strengthen the company’s liquidity position to meet its commitments to vendors and partners without disruption, according to the statement. Moreover, at least 90 percent of lenders have “entered into a transaction support agreement,” extending their support to the company’s recapitalization efforts.

Two weeks before the company’s bankruptcy filing, the trading of its shares was suspended by the New York Stock Exchange (NYSE). The Container Store Group Inc. failed to maintain an average market capitalization of at least $15 million in accordance with NYSE rules.

Retail Collapses

A number of prominent retail corporations have shut up shop in 2024. On Dec. 21, New Jersey-based Party City announced its shuttering of nearly 700 stores nationwide.

“The decision was made following exhaustive efforts by the company to find a path forward that would allow continued operations in an immensely challenging environment driven by inflationary pressures on costs and consumer spending, among other factors,” Party City said in a statement.

Earlier, discount chain Big Lots announced receiving approval to shut down hundreds of outlets after the company expressed “substantial doubt” on continuing business operations.

Big Lots has 1,392 stores across the United States. According to its latest announcement, Big Lots will close 315 outlets, which make up more than 22 percent of its total stores. The store count had already been reduced from last year’s 1,425 outlets.

In July, supermarket chain Stop & Shop said it would close 32 outlets on or before Nov. 2. The company decided to “close underperforming stores to create a healthy base for the future growth of our brand,” it said.

The same month, furniture retailer Conn’s announced it was shutting down all of its 553 retail stores nationwide and had filed for bankruptcy after experiencing a slowdown in recent years that negatively affected the company’s sales and liquidity.

Other major 2024 bankruptcies include Red Lobster, Spirit Airlines, LL Flooring, TGI Fridays, and Tupperware.

According to S&P Global Market Intelligence, U.S. bankruptcies in 2024 “could reach the highest level in over a decade.” In October, around 60 public and private companies filed for bankruptcy.

“If the pace of filings in October continues through the next two months, bankruptcies in 2024 will exceed the 638 bankruptcies filed in full-year 2020 to set a new 14-year high,” said S&P Global.

Based on data from Epiq AACER released by the American Bankruptcy Institute, overall commercial filings increased by 8 percent to 2,582 in October 2024, up from the 2,396 commercial filings registered in October 2023. There were 563 commercial Chapter 11 filings registered in October 2024, down by 13 percent from the 647 filings registered in October 2023.

The Associated Press contributed to the report.