Container Store: 35-Day Prepackaged Chapter 11 Exit

The Container Store Group, Inc., the Coppell, Texas-based home organization retailer founded in 1978, filed for Chapter 11 bankruptcy protection on December 22, 2024, in the U.S. Bankruptcy Court for the Southern District of Texas. The company emerged from bankruptcy 35 days later after eliminating approximately $88 million in debt, securing $40 million in new financing, and converting its term lenders into equity owners.

The prepackaged restructuring followed the failure of a proposed $40 million investment from Beyond Inc., the parent company of Bed Bath & Beyond, which withdrew when financing terms could not be secured. With over 92% of term lenders supporting the plan before filing, the company maintained operations at all 102 retail locations and its e-commerce platform throughout the chapter 11 process.

Company History and Market Position

Founded in 1978 in Dallas, Texas, The Container Store grew from a single 1,600-square-foot location to a national retailer focused on storage and organization products. Major corporate milestones include the 1999 acquisition of Swedish shelving brand Elfa International AB, the 2007 leveraged buyout by Leonard Green & Partners, and a 2013 initial public offering that valued the company at over $4 billion at its peak. By fiscal year 2021, annual sales surpassed $1.0 billion, driven by pandemic-era e-commerce growth and increased consumer focus on home improvement.

The Container Store operates through two primary product segments. The TCS Segment (94.5% of FY2023 revenue) includes Custom Spaces—featuring Elfa Classic, Elfa Décor+, Preston, and other wood-based systems—and General Merchandise comprising over 10,000 SKUs of bins, shelving, hooks, and food storage items. The Elfa Segment (5.5% of FY2023 revenue) supplies proprietary steel and wire components sold exclusively through The Container Store domestically and wholesaled in approximately 30 countries from Elfa International AB in Malmö, Sweden. Elfa and its Polish manufacturing subsidiaries are not debtors in the chapter 11 cases.

The Container Store's inventory is approximately 47% domestically sourced and 53% imported, with 33% originating from China. Two U.S. distribution centers serve stores and e-commerce fulfillment, while the C Studio manufacturing facility in Elmhurst, Illinois handles premium wood fabrication for custom closet systems. The company's omnichannel strategy encompasses in-store shopping, mobile ordering, call center sales, curbside pickup, and same-day delivery partnerships—a multi-channel approach that contributed 28% of fiscal 2023 revenue.

Prepetition Capital Structure

As of the petition date, The Container Store carried approximately $243.1 million in funded debt:

The company reported approximately $11.8 million in cash on hand at filing. Balance sheet liabilities totaled approximately $836 million against $969 million in assets.

The Prepetition ABL Credit Agreement, originally established on April 6, 2012, provided for a revolving credit line of up to $100 million with a $40 million sublimit for letters of credit and a $15 million swingline loan sublimit. The ABL was scheduled to mature on the earlier of November 25, 2025, or October 31, 2025, if any portion of the term loan obligations remained outstanding without extension. The Prepetition Term Loan Facility was originally $275 million, reduced through periodic amortization to approximately $163.1 million at filing. Under equity pledge amendments, the lien on Elfa International AB stock increased from 65% to 100% as additional security.

Corporate Structure and Debtor Entities

Five related entities filed voluntary chapter 11 petitions in the jointly administered proceeding:

1. The Container Store Group, Inc. (Lead Case) - publicly traded Delaware corporation
2. The Container Store, Inc. - operating subsidiary
3. C Studio Manufacturing Inc. - domestic manufacturing entity
4. C Studio Manufacturing LLC - manufacturing subsidiary
5. TCS Gift Card Services, LLC - gift card program administrator

The Container Store Group, Inc. directly owns 100% of The Container Store, Inc., which in turn owns 100% of TCS Gift Card Services, LLC and C Studio Manufacturing Inc. Elfa International AB and its Polish subsidiaries were not debtors in the chapter 11 cases and continued operating outside the bankruptcy estate.

Path to Bankruptcy

In May 2024, the company began exploring strategic alternatives. The Board formed a Transaction Committee—comprised of independent and disinterested directors—to evaluate potential sale, new equity investment, or debt refinancing options. JPMorgan was retained to contact approximately 40 strategic investors and 26 financial sponsors, generating 5 non-binding proposals. Only one investor—Beyond, Inc.—advanced to serious negotiations.

In October 2024, Beyond Inc. announced it would invest $40 million in The Container Store in exchange for a 40% equity stake. Beyond, the parent company of Bed Bath & Beyond and Overstock, intended to utilize Container Store locations to showcase Bed Bath & Beyond products. The investment was contingent on The Container Store amending its borrowing terms with existing lenders. After extended negotiations, the Ad Hoc Group of term lenders declined to provide the necessary amendments on terms acceptable to Beyond. Beyond withdrew in late October 2024.

The company cited rising interest rates that increased debt service costs, inflationary pressures on consumer discretionary spending, reduced home sales affecting demand for storage and organization products, competition from mass-market retailers including Target, Walmart, and Amazon, and credit rating downgrades by S&P and Moody's.

By the second fiscal quarter of 2024, net sales fell 10.5% year-over-year, and adjusted EBITDA fell from $35.8 million to $8.2 million. Liquidity fell below $15 million by October 2024, and the company reported covenant pressures and vendor constraints.

The Intercreditor Agreement, originally executed on April 6, 2012, allocated collateral between the ABL and Term Loan facilities. The prepackaged plan refinanced the ABL and equitized the term loans.

DIP Financing and Transaction Support Agreement

Advised by Houlihan Lokey, the Debtors secured a DIP financing package:

The court entered an interim DIP Order on December 23, 2024—one day after filing—authorizing access to working capital for operations. The Final DIP Order was entered on January 16, 2025.

The restructuring was governed by a December 21, 2024 Transaction Support Agreement executed by the company and over 92% of term loan lenders. The TSA established the framework for a prepackaged chapter 11 plan providing for full payment of all allowed general unsecured claims, equitization of term loans into new common equity, ABL refinancing through the Exit ABL facility, cancellation of existing public equity without consideration, and third-party releases on an opt-out basis.

Key Case Timeline

Plan Treatment and Creditor Recoveries

The prepackaged plan produced the following recoveries by class:

General unsecured creditors received 100% payment. The full payment eliminated the need for an Official Committee of Unsecured Creditors. Existing public shareholders (Class 7) received no distribution—their interests were canceled as part of the restructuring. The Container Store, formerly traded on NYSE under ticker TCS, became a privately held company owned by its former term loan lenders. Term lenders received new common equity in the reorganized company, with DIP term lenders receiving approximately 64% and prepetition term lenders receiving approximately 36%.

Exit Financing and Post-Emergence Position

The company emerged with a new capital structure:

The restructuring eliminated approximately $88 million in debt, reduced total funded debt from $243.1 million to $190 million, secured $40 million in new financing, added $40 million in additional ABL capacity, and extended debt maturities with eased payment terms. The reorganized company's total estimated enterprise value ranged between $184 million and $216 million, with expected equity value between $8 million and $41 million.

Operational Continuity During Restructuring

All 102 retail locations and the e-commerce platform remained open throughout the 35-day bankruptcy process. Only two stores closed during the period, characterized as normal-course closures. CEO Satish Malhotra stated the company was "here to stay."

The First Day Declaration authorized continuation of all customer programs—gift cards, store credits, returns, exchanges, and loyalty program benefits remained valid throughout the process and post-emergence. The company authorized payment of approximately $21 million in prepetition employee obligations for approximately 4,000 employees.

Professional Advisors and Fees

The DIP Order established a $750,000 Professional Fee Carve-Out. All professional fee applications were filed by February 26, 2025, with A&G Realty Partners filing its real estate advisor application on February 17, 2025. As part of the contemplated plan releases, the Board formed an Investigation Subcommittee—assisted by Hunton Andrews Kurth LLP—to evaluate potential prepetition claims including potential claims against officers, directors, and other insiders. The Subcommittee's independent review did not reveal any viable causes of action that would alter the Board's decision to proceed with the prepackaged plan.

U.S. Trustee Appeal

The chapter 11 plan included third-party releases provided on an opt-out basis—a structure that drew objection from the Office of the U.S. Trustee. On February 3, 2025, the U.S. Trustee filed an Emergency Motion for Stay of the Confirmation Order pending appeal. A Notice of Appeal was filed on March 24, 2025, with the appeal record transmitted on July 14, 2025. The appeal challenges the opt-out release structure.

Industry Context

The global home storage market was valued at $6.88 billion in 2024 and is projected to reach $10.97 billion by 2034. The U.S. home organizers market reached $12.05 billion in 2025 with a projected 4.78% CAGR through 2030, and over 42% of homeowners prioritize organization.

The company cited competition from mass-market retailers and softer home sales as factors affecting demand.

The case lasted 35 days. Over 92% lender support was in place before filing. General unsecured creditors were paid in full. The company emerged with an enterprise value of $184-$216 million.

Frequently Asked Questions

When did The Container Store file for chapter 11 bankruptcy and when did it emerge?

35 days. The company filed on December 22, 2024, and emerged on January 28, 2025.

What happened to The Container Store's debt?

The company eliminated approximately $88 million in debt, reducing total funded debt from $243.1 million to approximately $190 million through the restructuring.

Who owns The Container Store now?

The reorganized company is privately held by its former term loan lenders, who converted their debt to equity. DIP term lenders received approximately 64% of new equity, with prepetition term lenders receiving the remaining 36%.

Did any stores close during the bankruptcy?

Only two stores closed during the 35-day process, characterized as normal-course closures. All 102 locations and e-commerce operations remained fully operational throughout.

What happened to unsecured creditors?

General unsecured creditors received 100% payment. This full recovery eliminated the need for an Official Committee of Unsecured Creditors.

What was the Beyond Inc. deal that fell through?

Beyond Inc., the parent of Bed Bath & Beyond and Overstock, had announced a $40 million investment for a 40% equity stake in October 2024. Beyond planned to use Container Store locations to showcase Bed Bath & Beyond products. The deal collapsed when financing terms with existing lenders couldn't be secured.

Were gift cards honored during bankruptcy?

Yes. All gift cards, store credits, returns, and customer programs remained valid throughout the bankruptcy process and continue post-emergence.

Why did The Container Store file for bankruptcy?

The company cited declining home sales reducing demand, competition from mass-market retailers, rising interest rates increasing debt service costs, and the collapse of the Beyond investment deal as factors.

What is The Container Store's current financial position?

The company emerged with approximately $190 million in total funded debt, $40 million in new financing, additional ABL capacity, and extended debt maturities.

Is the U.S. Trustee's appeal still pending?

Yes. The U.S. Trustee filed an appeal challenging certain aspects of the confirmation order, including the opt-out third-party release structure. The appeal record was transmitted in July 2025.

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Who is the claims agent for Container Store?

Epiq Corporate Restructuring, LLC serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

For more analysis of retail restructurings and chapter 11 developments, visit the ElevenFlo bankruptcy blog.