Franchise Group, the parent of Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings, has filed for Chapter 11 bankruptcy to facilitate its restructuring.
The company has signed a restructuring support agreement with holders of approximately 80 per cent of its first lien debt to strengthen capital structure.
The deal will include the exchange of debt into equity in the reorganized enterprise. The lenders have committed $250 million in debtor-in-possession financing, subject to court approval.
The restructuring will also result in the winding down of American Freight, which has struggled due to sustained inflation and macroeconomic challenges, according to the company. It acquired American Freight in February 2020 for $450 million.
Franchised locations of the company’s brands are not part of the Chapter 11 proceedings.
“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings to realize their full potential,” said Andrew Laurence, president and CEO of Franchise Group.
“Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories,” Laurence added.
Franchise Group was founded in 2019 through the combination of Liberty Tax and Buddy’s Home Furnishings. The company acquired The Vitamin Shoppe for $208 million later the same year and Pet Supplies Plus for $700 million in 2021.
The company operates over 2200 brand locations across six countries with more than $3.4 billion in global sales, according to its website.
In its last earnings report as a public company, for the first half of 2023, Franchise Group posted revenue declines and about a $160 million net loss, Retail Dive reported. It was taken private last August in a $2.6 billion deal led by then-CEO Brian Kahn and other members of the company leadership.
The firm sold WS Badcock late last year and Sylvan Learning earlier this year. Both businesses were acquired in 2021.
