Thrasio files for Chapter 11

May 2024 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

May 2024 Issue

A result of the post-pandemic slump in online spending, next-generation consumer goods company Thrasio Holdings, Inc. has filed for Chapter 11 bankruptcy protection.

The filing allows Thrasio, one of the largest third-party sellers on the Amazon marketplace, to implement the terms of a restructuring support agreement (RSA) to eliminate approximately $495m of Thrasio’s existing debt, defer all interest payments in the first year post-emergence and infuse new capital into the company.

According to the New Jersey bankruptcy court, Thrasio’s estimated assets are in the range of $1 to $10bn, with estimated liabilities of $500m to $1bn.

Thrasio expects to use the RSA – arranged with approximately 81 percent of its revolving credit facility lenders and approximately 88 percent of its term loan lenders – to strengthen its financial position and meaningfully deleverage its balance sheet.

The company has also received commitments from certain of its lenders for up to $90m in new financing – an infusion of new capital that is expected to provide sufficient liquidity to support the company throughout the Chapter 11 process and beyond.

The financing will enable the continued operation of Thrasio’s brands, support ongoing business operations and provide the company with access to new capital upon emergence from Chapter 11 to support go-forward business operations.

“Over the past year, we have made significant progress transforming the business and advancing our objective to introduce hundreds of brands to millions of customers,” said Greg Greeley, chief executive of Thrasio. “We are taking steps to build on this progress by strengthening our financial position and working with our lenders to support our future success.”

“We appreciate the constructive engagement we’ve had with our lenders to date, and we look forward to continuing to work together towards the best path for the business and all our stakeholders,” continued Mr Greeley. “We are also grateful to our customers and partners for their support, and to our employees for their continued hard work and dedication.”

Serving as legal counsel is Kirkland & Ellis LLP, with Centerview Partners serving as financial adviser. AlixPartners LLP is serving as restructuring adviser.

Founded in 2018 by Carlos Cashman and Joshua Silberstein, the Massachusetts-based Thrasio reimagines how the world’s online marketplace products become accessible to everyone. It is estimated that one in six US homes has purchased a Thrasio product.

However, though particularly successful during the pandemic when online sales boomed, sales slowed as consumers returned to previous consumption patterns, and Thrasio began to struggle with rising interest rates.

The company intends to continue to operate its business normally and without interruption throughout the Chapter 11 process – paying vendors and suppliers in full for goods and services provided – which it aims to complete on an expedited basis.

“With a strengthened balance sheet and new capital, we will be better equipped to support our brands, scale our infrastructure and enable future opportunities,” concluded Mr Greeley. “As we move forward, our team remains focused on supporting our brands by delivering exciting, innovative and beloved products.”

Fraser Tennant