Discount home goods retail chain Christmas Tree Shops reportedly defaulted on a loan that funded its bankruptcy and will be forced to close all of its stores.
The retailer, which operated 82 stores in 20 states, filed for chapter 11 bankruptcy in May but is now headed for liquidation, The Wall Street Journal reported Friday. The company took out a $45 million bankruptcy loan, including roughly $20 million in fresh capital, from its lenders, the Journal reported. But the creditors terminated the loan after the company defaulted because of worsening revenue and liquidity, according to a notice filed with the U.S. Bankruptcy Court in Wilmington, Delaware, late Thursday.
Handil Holdings, owned by Marc and Pam Salkovitz, bought Christmas Tree Shops from Bed Bath & Beyond in 2020. The retailer is based in Middleboro, Massachusetts.
The company and its stakeholders reached an agreement last week to liquidate the remaining roughly 70 stores unless a buyer emerges within the next week or so, according to the court filing.
"Unfortunately, circumstances have resulted in the plan really not being able to go forward because quite simply, the debtor doesn't have the time nor the money to go forward with the plan," said Harold Murphy, an attorney for the retailer, during a Thursday court hearing, the Journal reported.
A number of retailers have filed for bankruptcy this year, including Bed Bath & Beyond, which planned to close all of its stores by the end of June. Consumers cut back on discretionary spending this year because of high inflation, focusing on staples such as food, gas, and housing expenses.
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