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Shares of The Container Store were halted on the New York Stock Exchange as it prepared to delist the stock, the latest blow to the struggling retailer.
The decision was taken on Monday as it fell below the NYSE’s continuous listing standard. This standard requires listed companies to maintain an average global market capitalization of at least $15 million over 30 consecutive trading days.
The company still has the right to appeal the decision. The Company will not be delisted until all processes, including any appeal of the NYSE Regulation Staff’s decision, have been completed. But this comes amid reports that the company is on the verge of filing for bankruptcy.
Why The Container Store Could Be the Next Retailer to Go Bankrupt
The nationwide retailer, which offers a range of custom spaces, organizational solutions and home services and gained fame through success at a time of netflix The “Tidying Up” series, now struggling with a weak housing market and the increasing availability of cheaper alternatives.
Sam Stovall, chief investment strategist at CFRA Research, told Fox Business that a delisting by the NYSE “could have an adverse impact on the company’s performance and position.”
Facade of The Container Store retail store on Santana Row in Silicon Valley, San Jose, California, January 3, 2020. (Smith Collection/Gado/Getty Images/Getty Images)
Stovall said, “Like a Major League Baseball player who is demoted by the New York Yankees to one of their minor league teams, fewer fans will want to buy his trading card, and his contract is likely to be renegotiated.” ”
The company had already suffered a setback when Beyond withdrew its $40 million deal with The Container Store Group. Beyond, which re-emerged from bankruptcy last year after facing its own financial troubles, plans to invest in The Container Store Group and use a section within the stores’ real estate locations to sell kitchen, bath and bedroom items. Done to display your classification, which will be co-. Branded.
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However, Beyond Inc. executive chairman Marcus Lemonis said last month that the company was concerned The Container Store might not be able to negotiate terms with its lenders. financial requirements of the deal,
The Container Store Group Inc. in New York. The Container Store Group Inc. at Shopping Cart on Location. Signage is seen. (Jin Li/Bloomberg via Getty Images/Getty Images)
Lemonis said, “When we signed the purchase agreement, we were optimistic that The Container Store would be able to secure sufficient financing to pursue the business.” “Although we continue to believe in the fundamentals of The Container Store’s brand and business, the proposed financing terms we have reviewed to date are not in our view necessary to complete the transaction.”
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Patrick Collins, a bankruptcy and restructuring attorney at the New York-based law firm Farrell Fritz, said The Container Store’s ability to avoid bankruptcy really depends, “at least in the short term, on whether it can get relief from its creditors.” ”
“The timing of a potential bankruptcy will be determined by the company’s liquidity and progress in preparations toward implementing the strategy it expects to implement in a Chapter 11 bankruptcy case,” Collins said. “Meanwhile, publicized predictions of a bankruptcy filing by The Container Store may increase financial pressure on the company as the possibility of bankruptcy may cause trade vendors to tighten or eliminate credit terms offered to the company.”
