The Container Store Group, Inc. (TCSG) Chapter 11 Overview

The Container Store Group, Inc. (TCSG) filed Chapter 11 petitions in the Southern District of Texas on December 22, 2024. At filing, the Debtors reported approximately $243 million of funded debt; as of September 28, 2024, they reported $836.4 million in total liabilities against $969 million in assets (per quarterly reporting). Supported by over 90% of term lenders, the prepackaged plan targeted a ~60-day confirmation timeline. Chief Restructuring Officer Chad E. Coben (FTI Consulting) led the process. The website and more than 100 stores (102 at filing; 104 listed in first-day papers) remained open during the restructuring.

Case Snapshot

• Petition Date: December 22, 2024
• Venue: U.S. Bankruptcy Court, S.D. Texas (Houston)
• Prepetition Debt: $243 million funded (ABL + term loan); $25.9 million trade
• DIP Facility: $40 million new-money + $75 million roll-up
• Store Footprint: >100 locations open during the case

Background

The Container Store Group, Inc. (TCSG) is a publicly traded Delaware corporation that owns and controls each of the other debtor entities in these Chapter 11 proceedings. Specifically, TCSG directly owns 100% of The Container Store, Inc. (TCS), which in turn owns 100% of TCS Gift Card Services, LLC (TCS Gift) and C Studio Manufacturing, Inc. (C Studio Inc). C Studio Inc owns 100% of C Studio Manufacturing LLC (C Studio LLC). The Elfa subsidiaries (based in Sweden and Poland) are non-debtor entities operating in the ordinary course outside the Chapter 11 cases.

An organizational chart filed with the court shows TCSG atop the chain, with Elfa entities shaded separately.

Corporate History

Founded in 1978 in Dallas, The Container Store grew from a 1,600-square-foot store to a 104-store national chain. Major milestones include the 1999 acquisition of Swedish shelving brand Elfa, the 2007 Leonard Green & Partners buy-out, and a 2013 IPO. By 2021, annual sales surpassed $1.0 billion, fueled by e-commerce growth, before macroeconomic shifts triggered the current restructuring.

Product Segments

The Debtors operate through two primary product segments: (1) TCS (which includes Custom Spaces and General Merchandise) and (2) Elfa. For fiscal year 2023, total net sales were approximately $847.7 million, with the TCS segment accounting for around 94.5% ($801.4 million) of sales and Elfa about 5.5% ($46.3 million).

Custom Spaces: Elfa Classic, Elfa Décor+, Elfa Garage+, Preston and other wood-based systems—many produced at the ~58k sq ft C Studio plant in Elmhurst—drive the company’s design-and-install revenue.

General Merchandise: More than 10,000 SKUs of bins, shelving, hooks and food-storage items complement the Custom Spaces lines.

Elfa: Elfa International AB (Malmö, Sweden) supplies proprietary steel and wire components sold exclusively through TCSG and wholesaled in 30 countries. Elfa and its subsidiaries are not debtors.

Sourcing & Distribution

Inventory is 47% domestic and 53% imported (33% from China). Two U.S. distribution centers—Coppell, TX (1.1MM sq ft) and Aberdeen, MD (700k sq ft)—serve stores and e-commerce, while C Studio handles premium wood fabrication.

TCSG operates 100+ stores averaging ~24k sq ft. Omnichannel platforms—site, mobile, call-center, curbside and same-day delivery—contributed 28% of FY-2023 revenue.

Human Capital

The workforce totals roughly 3,800: ~750 salaried staff, ~850 full-time hourly, and ~2,200 part-time hourly employees across stores, distribution and headquarters.

Timeline of Key Milestones

Plan Economics & Creditor Treatment

• DIP Term Lenders: Receive ~64% of new equity
• Prepetition Term Lenders: Receive ~36% of new equity
• ABL Lenders: Paid in full via exit facility
• Trade & Lease Claims: Unimpaired; paid in ordinary course
• Existing Equity: Canceled without consideration
• Releases: Plan included third-party releases provided on an opt-out basis

Capital Structure

As of the Petition Date, the Debtors carried approximately $243.1 million in funded debt, comprising a revolving asset-based lending facility (the “Prepetition ABL Facility”) and a secured term loan (the “Prepetition Term Loan Facility”). Below is an overview of these facilities.

Debt Overview

Prepetition ABL Facility

Originally established on April 6, 2012 (the “Prepetition ABL Credit Agreement”), the Prepetition ABL Facility provides for a revolving credit line of up to $100 million—featuring a $40 million sublimit for letters of credit and a $15 million swingline loan sublimit. An uncommitted incremental revolving facility can add up to $50 million subject to certain conditions. The ABL matures on the earlier of November 25, 2025 or October 31, 2025 if any portion of the term loan obligations remain outstanding without extension. As of the Petition Date, approximately $80 million was drawn under the ABL, with $7.5 million in letters of credit issued.

The Prepetition ABL is guaranteed by TCSG, TCS Gift, C Studio Inc, and C Studio LLC and is secured by first-priority liens on “Prepetition ABL Priority Collateral,” including accounts, chattel paper, deposit accounts, inventory, and related assets. Under certain amendments, the equity pledge in Elfa increased from 65% to 100% as additional security. The ABL lenders hold second-priority liens on the “Prepetition Term Loan Priority Collateral.”

Prepetition Term Loan Facility

Also dated April 6, 2012 (the “Prepetition Term Loan Credit Agreement”), the Prepetition Term Loan Facility was originally $275 million and matures on January 31, 2026. As of the Petition Date, the outstanding principal was roughly $163.1 million. These term loan obligations are secured by first-priority liens on equipment, fixtures, real property, intellectual property, investment property, and other “Prepetition Term Loan Priority Collateral.” Second-priority liens extend to the ABL Priority Collateral, mirroring the dual-lien structure present in the ABL facility.

Intercreditor Agreement & Unsecured Debt

The Intercreditor Agreement (initially executed on April 6, 2012, as amended) allocates collateral between the ABL and Term Loan facilities, detailing each lender group’s rights in bankruptcy. Beyond secured debt, the Debtors also carry customary unsecured obligations—particularly $25.9 million of trade payables, which they expect to pay in the ordinary course. Monthly lease expenses average $11.7 million, covering 100+ store locations, distribution centers, and corporate offices.

Events Leading to Chapter 11

Pulled-forward pandemic demand faded in 2024: Q2 net sales fell 10.5% year-over-year, and adjusted EBITDA plunged from $35.8 million to $8.2 million. Rising interest costs and looming maturities compressed liquidity below $15 million by October, triggering covenant pressures and vendor constraints after credit downgrades from S&P and Moody’s.

Strategic Alternatives & Special Committees

Recognizing its deteriorating financial position, the Board undertook a Strategic Alternatives Review to evaluate a potential sale, new equity investment, or refinancing of existing debt. A Transaction Committee—comprised of certain independent and disinterested directors—was formed to facilitate this review, negotiate potential deals, and make recommendations to the full Board. As restructuring considerations intensified, the Board also created a Restructuring Committee to guide high-level decisions and, later, an Investigation Subcommittee to examine whether any prepetition transactions might affect the proposed plan releases.

During the Strategic Alternatives Review, JPMorgan reached out to approximately 40 strategic investors and 26 financial sponsors, resulting in five non-binding proposals. Only one investor, Beyond, Inc., advanced to discussing a strategic partnership: a planned $40 million convertible preferred equity investment. However, Beyond’s proposal hinged on an amendment or refinancing of the Prepetition Credit Facilities on terms acceptable to both Beyond and the Ad Hoc Group of lenders. After extended negotiations, Beyond ultimately declined to move forward, prompting a renewed focus on a comprehensive in-court restructuring.

Throughout Summer and Fall 2024, the company’s liquidity tightened further due to increased borrowings under the ABL for holiday inventory, higher interest expense, and vendor pressure from credit downgrades by S&P and Moody’s. To avoid default, The Container Store secured Amendment No. 9 to the Prepetition Term Loan Credit Agreement in October 2024, waiving certain leverage covenants and setting deadlines to achieve a qualified financing. Despite sequential improvements in Custom Spaces revenue, the broader softening retail environment meant the company still projected negative cash flow into 2025.

Pivot to DIP-to-Exit Financing

Advised by Houlihan Lokey, the Debtors secured a DIP facility from an Ad Hoc term lender group led by Eaton Vance: $40 million in new-money loans (First-Out DIP Term at SOFR + 6.50%, up to 5.50% PIK with 2.00% SOFR floor; Second-Out DIP Term at SOFR + 5.00%, up to 4.00% PIK with 2.00% SOFR floor), and a $75 million roll-up of existing debt. Eclipse Business Capital arranged a replacement ABL at SOFR + 4.25%. The terms were documented in a December 21 Form 8-K; the court entered the final DIP order on January 16, 2025.

As part of the contemplated plan releases, the Board formed an Investigation Subcommittee—assisted by Hunton Andrews Kurth LLP—to evaluate any potential prepetition claims. The Subcommittee’s review did not reveal any viable causes of action that would alter the Board’s decision to move forward with the prepackaged plan. Accordingly, the Transaction Support Agreement and plan solicitation proceeded without modification to the proposed releases.

The restructuring plan, governed by the December 21 Transaction Support Agreement, provides for: (1) full payment of general unsecured claims; (2) equitization of term loans; (3) ABL refinancing; and (4) cancellation of existing equity. Elfa International AB operations continue unaffected outside the Chapter 11 cases.

Emergence

The plan was confirmed on January 24, 2025, and became effective on January 28, 2025—a roughly 37-day Chapter 11 from petition to effectiveness (company release). With a new $140 million exit ABL (SOFR + 4.25%, maturing January 28, 2028) and DIP and prepetition term lenders receiving fresh equity, the retailer exited bankruptcy as a private company and significantly delevered.

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