Leslie's Seeks $687M-Plus Debt Cut in Chapter 11

Leslie's is pursuing a lender-backed Chapter 11 restructuring that would reduce its funded debt by more than $687 million, according to an October 9, 2026 court filing. The proposal combines a debt-for-equity exchange with new financing and a smaller retail footprint. Separately, the company announced 76 additional store closures before filing for bankruptcy. The debt reduction remains a proposed outcome; the court has approved operating financing on an interim basis. October 9 lease motion, pp. 3–4 Lease-rejection motion, pp. 4–5 Interim financing order, p. 20

The first-day declaration described debt relief of more than $685 million; the later filing uses more than $687 million. This account uses the later description for the proposed reduction and draws on the September 30 restructuring agreement and selected court filings through October 9, 2026. First-day declaration, pp. 3–4 October 9 lease motion, pp. 3–4

What has changed in Leslie's, Inc. since this article was published?

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Debtor(s)	Leslie's, Inc. and affiliated debtors
Court	U.S. Bankruptcy Court for the Southern District of Texas, Houston Division
Case Number	26-90795
Petition Date	September 30, 2026

The October 9 motion identifies the petition date and confirms that the cases are jointly administered. October 9 lease motion, pp. 1–3

The debt exchange and proposed creditor recoveries

Leslie's entered Chapter 11 with approximately $787 million of funded secured debt: $757 million under its term-loan facility and $30 million under its asset-based revolving facility. Its September 30 restructuring support agreement had support from holders of approximately 81% of prepetition term-loan claims. Leslie's Poolmart, the main operating subsidiary, is the term-loan borrower; Leslie's, Inc. is the Nasdaq-listed holding company. First-day declaration, pp. 10–13, 18–19

The attached restructuring term sheet provides different consideration for existing term lenders, general unsecured creditors, and shareholders. These are proposed distributions under the contemplated plan, contingent on implementation of the restructuring. Restructuring term sheet, pp. 79–85

Claim or interest	Proposed treatment
Allowed prepetition term-loan claims	Pro rata share of 10% of new common equity, subject to dilution from the management incentive plan
Allowed general unsecured claims entitled to a distribution	Pro rata share of a $500,000 cash pool, including claims arising from rejected contracts and leases
Existing equity interests	Cancellation without consideration

Source: Restructuring term sheet, p. 85.

The $500,000 is the aggregate unsecured-creditor pool. A creditor's recovery therefore depends on its allowed claim and the total claims entitled to share that pool; the pool size alone does not establish a recovery percentage. Landlord rejection-damages claims would share in the same proposed pool. Restructuring term sheet, p. 85

The proposal also preserves some term debt after emergence. It would convert $75 million of debtor-in-possession term-loan claims into a new term facility and exchange the remaining claims, including premium loans and accrued or capitalized interest, for new common equity. Restructuring term sheet, p. 84

Financing combines new cash, a revolving facility, and exit equity

The October 1 interim order authorizes Leslie's Poolmart to borrow under a $90 million debtor-in-possession term facility and an asset-based revolving facility of up to $225 million. The restructuring agreement separately provides for a $60 million equity investment to finance the exit from Chapter 11. All amounts below are in U.S. dollars. Interim financing order, pp. 1–3, 20–23 First-day declaration, p. 25

Financing component	Amount	Availability and conditions
New-money term facility	Up to $90 million	$45 million available after interim approval and satisfaction of credit-agreement conditions; another $45 million requires final approval and satisfaction of conditions
Asset-based revolving facility	Up to $225 million	Interim borrowing authority, subject to the order, approved budget, and credit agreement; includes a roll-up of prepetition revolving debt
Exit equity investment	$60 million	Proposed investment backstopped by participating lenders, subject to the restructuring terms

Sources: Interim financing order, pp. 2–3, 20–23 and Restructuring term sheet, pp. 81–82.

The revolving facility includes existing debt through the roll-up, so its headline capacity should not be treated entirely as fresh cash. The order approves a creeping roll-up on an interim basis, with the final roll-up contingent on a final order. The term facility's two-stage availability also separates interim borrowing authority from the full new-money commitment. Interim financing order, pp. 2–3, 23

The 76-store closure wave builds on earlier cuts

The September 30 lease-rejection motion distinguishes two rounds of reductions. During the preceding twelve months, Leslie's had reduced its footprint by approximately 80 stores and one distribution center. Immediately before the petition, it announced an additional 76 closures, which it expected to complete within approximately fourteen days after filing. That schedule is an expectation in the motion, rather than evidence that every location had been vacated by the reporting cutoff. Lease-rejection motion, p. 5

For the new closure wave, Leslie's proposed moving inventory to stores that would remain open, avoiding the cost and administrative burden of separate inventory liquidations. It sought lease rejection effective as of the later of the petition date or surrender of the premises, explaining that continued rent and related charges would otherwise burden locations no longer contributing to operations. Lease-rejection motion, pp. 4–6

The portfolio review continued after filing. On October 9, Leslie's requested an extension of its lease-assumption-or-rejection deadline to April 28, 2027, or a later date agreed with an applicable landlord. The company said the additional time would support lease evaluation and negotiations over accommodations. The April date is requested relief in that motion. October 9 lease motion, pp. 1–4

Who maintains the case records?

Kroll Restructuring Administration LLC is the court-appointed claims, noticing, and solicitation agent. The September 30 retention order designates Kroll as the repository for proofs of claim and requires it to maintain the official claims registers. Kroll retention order, p. 1

The timetable is tied to inventory buying season

Chief Financial Officer Jeff White attributed the liquidity pressure to weaker demand, weather, competition, and a highly leveraged balance sheet. He explained that Leslie's sells predominantly during pool season and makes its most significant inventory purchases at the beginning of the calendar year, making an early-2027 exit an operational priority. First-day declaration, pp. 3–4

The September 30 agreement sets milestones for filing a plan and disclosure statement within twenty days of the petition, obtaining confirmation within one hundred days, and reaching effectiveness within one hundred ten days. These are agreement milestones, not completed court outcomes. The interim financing order schedules the final financing hearing for October 27, 2026, at 9 a.m. Central Time, subject to adjournment. Restructuring term sheet, p. 83 Interim financing order, p. 78

The proposed debt reduction, unsecured-creditor pool, and equity cancellation depend on implementation through a plan. The terms of that plan and its eventual effectiveness will determine the creditor outcome while Leslie's completes its store-footprint review. Restructuring term sheet, pp. 79, 85–86

Sources

1. October 9 lease motion, pp. 3–4 /documents/cbcfa41b-a52a-4ae7-93db-b7a64f47d962/
2. Lease-rejection motion, pp. 4–5 /documents/138aa835-2252-44f1-b504-6fc6d234efed/
3. Interim financing order, p. 20 /documents/91aed6a7-c7bc-400b-8881-442c22716e7d/
4. First-day declaration, pp. 3–4 /documents/3b40a89f-040c-4332-958c-b0a77735a111/
5. Kroll retention order, p. 1 /documents/76d1c0df-cba1-423b-891c-f7409c938f62/