By Ben Otto

The Container Store Group has filed for bankruptcy as it contends with quarterly losses and rising debt levels that have shaken investor confidence and led to its imminent delisting.

The struggling specialty retail chain offering storage and organization products said late Sunday that it had filed for Chapter 11 bankruptcy protection in a Texas district court, with plans to complete a reorganization plan within 35 days.

The Coppell, Texas-based retailer said at least 90% of its term loan lenders had agreed to support a deal that will give it $40 million in new money financing, at least $45 million in deleveraging, "substantial" debt service relief and what it described as "material maturity runway."

The Container Store Group said it had also modified an asset-backed lending facility to add $40 million in capacity. Altogether, the plan "will substantially strengthen" the company's balance sheet and liquidity position to enable stable operations, it said.

"The Container Store is here to stay," said Chief Executive Satish Malhotra in a statement, adding that the plan would allow the company to expand its reach and strengthen capabilities.

The company said that outside of the term loan lenders, the company's other creditors, including vendor and trade partners, won't be affected by the moves. It said it would emerge from the process as a private company, under the ownership of its term loan lenders.

Business operations remain normal, and the Chapter 11 process doesn't include the company's Elfa business in Sweden, it added.

The protection filing comes after Beyond, the owner of businesses including Bed Bath & Beyond and Overstock, last month raised doubts about its plan to extend a lifeline to the Container Store with a $40 million investment. Beyond said then that it wasn't confident Container Store could meet a condition to secure new financing terms from lenders.

Founded in 1978, the Container Store has faced dwindling sales of its general merchandise products and steep quarterly losses, along with mounting total debt that stood at about $232.0 million at the end of September, up almost $60 million from a year earlier.

Its board earlier this year began reviewing strategic alternatives for the business to boost the company's value.

The company's shares slipped 24% on Friday, taking losses this month to 91%. A plan by the New York Stock Exchange to delist the shares, initiated earlier this month, takes effect today.

Write to Ben Otto at ben.otto@wsj.com

(END) Dow Jones Newswires

December 23, 2024 02:30 ET (07:30 GMT)

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