Tuesday Morning Acquired by Hilco in Bankruptcy Sale

Off-price home décor retailer Tuesday Morning has been acquired by Hilco Merchant Resources for $32M in a court-approved bankruptcy sale—over the objection of a global management firm that argued it was prepared to finance Tuesday Morning’s continued operations.

Judge Edward Morris of the Fort Worth division of the US Bankruptcy Court for the Northern Division of Texas overruled an objection from Invictus Global Management, which said in a filing it had committed $51.5M to support Dallas-based Tuesday Morning during its bankruptcy, RetailDive reported.

Tuesday Morning filed for Chapter 11 in February, the second time in three years the retail chain had filed for protection.

In a reorganization plan in March, Tuesday Morning vacated more than half of its stores and offering the leases up for auction. The retailer announced it retained A&G Real Estate Partners to put 250 of Tuesday Morning’s outlet locations up for auction.

Included in the auction were locations in Dallas, Houston, Phoenix and Tampa, many of which came with leases that have five years or more remaining on their lease terms. In its bankruptcy filing, Tuesday Morning said it planned to close low-traffic locations to focus its resources on stores in higher-traffic regions.

The Tuesday Morning store locations involved in the auction ranged in size from 6K SF to 28K SF; some were free standing and others were located in strip malls.

At its peak, Tuesday Morning had almost 700 stores; as of late November, the chain had 487 stores in 40 states. The company now will go out of business, with stores initiating closing sales.

According to court filings, Tuesday Morning said that shortly before its bankruptcy its creditors, led by Wells Fargo, increased the company’s reserve requirements from $10M to $30M, eliminating Tuesday Morning’s operating liquidity.

Invictus initially made a bid to buy the company out of bankruptcy, a deal that collapsed in March. Gordon Brothers then offered $12.5M of debtor-in-possession financing. At that point, Tuesday Morning had secured $27M to maintain operations, RetailDive reported.

On April 13, Tuesday Morning sought $10M from Invictus under an existing credit agreement but the Dallas firm said Invictus failed to fund the requested loan and instead requested that Tuesday Morning submit a new request for the minimum amounts necessary to operate, the report said.

After additional funding requests were denied, Dell Young, Tuesday Morning’s senior VP of finance, warned in a court declaration that an inability to access financing left the company unable to pay vendors, freight for delivery, monthly rent for May or make payroll.