BY Fraser Tennant
Citing inflationary pressures that made its business model unsustainable, budget retailer 99 Cents Only has filed for Chapter 11 bankruptcy.
99 Cents Only Stores, together with its financial and legal advisers, engaged in an extensive analysis of all available and credible alternatives to identify a solution that would allow the business to continue.
Following months of actively pursuing these alternatives, the company ultimately determined that an orderly wind-down was necessary and the best way to maximise the value of 99 Cents Only Stores’ real estate and other assets.
To that end, the company has secured $60.8m in senior secured super priority debtor in possession financing consisting of $35.5m in new money to be provided by an entity affiliated with certain of the company's existing stakeholders, subject to court approval.
To date, all 99 Cents Only Stores remain open, and the company has commenced going out of business sales at all 371 store locations, offering customers significantly reduced prices on a wide range of products. The company has also filed customary motions with the bankruptcy court to support its operations through the wind-down process, including payment of employee wages.
“This was an extremely difficult decision and is not the outcome we expected or hoped to achieve,” said Mike Simoncic, interim chief executive of 99 Cents Only Stores. “Unfortunately, the last several years have presented significant and lasting challenges in the retail environment, including the unprecedented impact of the pandemic, shifting consumer demand, rising levels of shrink, persistent inflationary pressures and other macroeconomic headwinds, all of which have greatly hindered the company’s ability to operate.”
To help facilitate the wind-down, the company has appointed Chris Wells, managing director at Alvarez & Marsal, as chief restructuring officer, with Mr Simoncic stepping down.
Founded in 1982, 99 Cents Only Stores LLC currently operates nearly 371 stores located in California, Texas, Arizona and Nevada. It offers a broad assortment of name brand and other attractively priced merchandise as well as compelling seasonal product offerings.
Mr Simonic concluded: “We deeply appreciate the dedicated employees, customers, partners and communities who have collectively supported 99 Cents Only Stores for decades.”
News: Retailer 99 Cents Only files for bankruptcy, plans to shut down