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Law360 (May 19, 2020, 2:21 PM EDT ) Home furnishing retailer Pier 1 Imports Inc. asked a Virginia bankruptcy judge Tuesday afternoon for permission to wind down its operations and liquidate its assets after the COVID-19 outbreak dashed any hopes of restructuring its business and continuing on as a going concern.
In court papers, the company said that while it entered bankruptcy in February with the support of its lenders, the pandemic has destroyed any hopes Pier 1 had to find a going-concern buyer or to restructure its balance sheet through a debt-for-equity swap.
"It is now clear that Pier 1's future does not involve any brick-and-mortar retail locations," the motion for a wind-down said. "After pursuing every available alternative ... the debtors are left with no choice but to wind down their retail operations and seek to sell all remaining assets, including their intellectual property and e-commerce business."
The debtor intends to provide more details to the court concerning the execution of the wind-down and the continuation of post-petition financing to fund the shutdown and liquidation, according to the motion. To fund the extended wind-down of operations, Pier 1's debtor-in-possession financing providers have agreed to make another $40 million of cash available to the company, according to the motion.
Pier 1 is asking to extend a bidding deadline originally approved as part of sale procedures to complete a going-concern sale of the debtor's assets, now seeking a July 1 bid deadline for a liquidation transaction offer. An auction is being sought for July 8 if necessary, with a July 15 sale hearing to follow.
The company will begin winding down all of its stores in accordance with an existing procedures order put in place by the court earlier in the case to govern the closure of a smaller subset of Pier 1's locations, according to the motion. The liquidations will begin as the stores are able to reopen with the relaxing of business restrictions nationwide.
"This decision follows months of working to identify a buyer who would continue to operate our business going forward," Pier 1 CEO Robert Riesbeck said in a statement Tuesday. "Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down."
Pier 1 filed for Chapter 11 in February, saying bankruptcy protection was needed to keep the company going while it corrects course from a "misguided" shift in marketing strategy, sheds hundreds of underperforming stores, and responds to both online and brick-and-mortar competition.
When the COVID-19 outbreak came to North America, Pier 1 sought and received permission to suspend normal bankruptcy procedures in light of the forced closure of all of its stores after government business restrictions began falling into place in March and April.
Pier 1 is represented by Joshua A. Sussberg, Emily E. Geier, AnnElyse Scarlett Gains and Joshua M. Altman of Kirkland & Ellis LLP and Michael A. Condyles, Peter J. Barrett, Jeremy S. Williams and Brian H. Richardson of Kutak Rock LLP.
The case is In re: Pier 1 Imports Inc., case number 20-30805, in the U.S. Bankruptcy Court for the Eastern District of Virginia.
--Editing by Abbie Sarfo.
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