CTS, also known as Christmas Tree Shops, filed for Chapter 11 bankruptcy protection.
The Middleboro, Mass.-based specialty retailer said the financial restructuring will 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.
“After careful consideration we determined that availing ourselves of the Chapter 11 process was the best way to address our burdensome liabilities,” said CTS chairman Marc Salkovitz. “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. We continue to believe that given its storied history and strong customer loyalty, CTS has tremendous potential, and we remain committed to the long-term success of the business.”
The company, which describes itself as the “go-to destination for celebrating, decorating and everyday-ing at bargain prices,” was acquired by Handil Holdings in 2020. Since then include, the brand has brought in experts to improve operational efficiencies and inventory management and created a new stand-alone modern IT environment, and it developed and implemented new store prototype and customer loyalty program.
The company hopes to complete its financial restructuring and emerge from Chapter 11 a financially stronger retailer before the end of August, according the press release announcing the filing.
On May 10, CTS received interim approval to use its $45 million debtor-in-possession. financing from Eclipse Business Capital SPV LLC and ReStore Capital LLC.
A final hearing to approve the use of DIP financing agreement has been set for May 31, 2023.
With these approvals in place, CTS can continue to operate in the normal course throughout its brief Chapter 11 restructuring including:
• Maintaining employee payroll and health benefits,
• Paying vendors for all post-petition goods and services, and
• Continuing all customer programs such as gift cards.
“We are pleased to have received approval of the first-day motions. This allows us to continue operating our ongoing stores without interruption for our loyal customers, while maintaining our relationships with our vendors and business partners,” said Salkovitz. “We thank our customers for their loyalty and our employees for their hard work and dedication as we work to complete our Chapter restructuring and emerge a financially stronger retailer by the end of August.”