A clothing retailer now makes a painful decision to close all stores after the company filed for Chapter 11 bankruptcy protection.
Soft Surroundings filed for Chapter 11 bankruptcy protection in September 2023.
And at the time of its initial filing, the women’s clothing chain operated a total of 44 stores in 24 states.
The company entered bankruptcy with an agreement in place to sell its brand to Coldwater Creek.
“Soft Surroundings has secured $18 million in debtor-in-possession (“DIP”) financing from Gordon Brothers, subject to court approval, to enable business continuity.
The DIP will enable the Company to continue to operate the business and meet its financial obligations, including the timely payment of employee wages and benefits without interruption, vendor payment for goods and services received on or after the filing date and other commitments during the restructuring,” the company said in a press release.
The company said that the new owner planned “will continue ongoing direct-to-consumer and e-commerce operations.”
It did not specifically say that Coldwater Creek would close all of its stores, but it was implied that Soft Surroundings would live on only as an online brand, reports TheStreet.
Soft Surroundings began as a catalog business before opening stores in 2005.
At its height, the chain operated as many as 70 retail stores, but the Covid-19 pandemic, like many others, affected the business significantly.
Coldwater Creek always intended to close Soft Surroundings’ brick-and-mortar locations, and those shutdowns have now been completed.
The chain slowly closed its stores over the course of a few months finishing the process at the end of February.
“Our commitment to our stakeholders has never wavered as we meticulously evaluated the best path forward and are welcoming this next step to financially secure a bright future for Soft Surroundings.
This will allow us to adapt, restructure and emerge more resilient, ensuring the longevity of the beloved Soft Surroundings brand for our customers and partners,” said Soft Surroundings Executive Chair Bridgit Lombard.
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Also Read: This Massive Mall Retailer Is Now Closing In California
Other Economy News Today
A massive mall clothing retailer now faces Chapter 11 bankruptcy as it struggles to keep its cash reserves above water.
Children’s Place, to its credit, has been working to get itself out of leases at dying malls, reports TheStreet.
“The chain has closed 250 locations over the past year driving more of its business to its website and its digital storefront on Amazon.
That’s probably the right strategy, but the retailer may run out of cash before it can fully correct its business,” the outlet reports.
Total liquidity as of Feb. 3, 2024 is expected to be approximately $45 million (including approximately $13 million of cash and cash equivalents and approximately $32 million of excess availability under the company’s credit facility after excluding all necessary reserves and excess availability requirements),” the company shared in advance of fourth quarters earnings release.
And, while the company has very little cash, it did share some good news when it comes to its overall debt load.
“As previously anticipated, total indebtedness is expected to decrease by more than $100 million versus the third quarter of fiscal 2023 and, as of February 3, 2024, is expected to be approximately $277 million as compared to $408 million as of the end of the third quarter of fiscal 2023,” Children’s Place added.
However, the company knows that it is in a dire position based on its available cash.
“The company has been working to improve its liquidity position and strengthen its balance sheet to best position the company for the future.
The company is working with its advisors (including Centerview Partners), lenders, and potential lenders to obtain new financing necessary to support ongoing operations, and is considering strategic alternatives in the event that the company is unable to consummate new financing,” it shared.
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Also Read: Another Mall Clothing Retailer Now At High Risk of Bankruptcy
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