Overwhelmed by debt, At Home enters Chapter 11

At home storefront
At Home has filed for Chapter 11 bankruptcy protection. (Source: At Home)

Home furnishing store chain At Home has filed for Chapter 11 bankruptcy protection to facilitate a restructuring process as it works to resolve its debt.

The business has entered into a restructuring support agreement with its lenders to enable financial restructuring that will eliminate nearly $2 billion in funded debt. 

The deal will also provide a capital infusion of $200 million to support the company’s restructuring process and beyond.

The chain’s ownership is expected to transition to the lenders, which include funds affiliated with Redwood Capital Management, Farallon Capital Management, and Anchorage Capital Advisors.

At Home will continue serving customers both in-store and online during the Chapter 11 process. It has secured $600 million in debtor-in-possession financing to provide sufficient liquidity during the process.

According to GlobalData MD Neil Saunders, the elimination of debt under Chapter 11 will allow the company to operate on a more stable basis, but will not solve all of its problems.

“At Home is suffering from the slowdown in consumer demand for home furnishings, which is partly a consequence of low consumer confidence and a sluggish housing market.  

“On top of this, the proposition of At Home is weak. There is way too little inspiration and not nearly enough excitement to draw people into the stores – particularly in areas where competition is high. Nor are prices all that sharp to provide a reason to choose At Home over other players,” the analyst explained.

While the debt reduction will buy time, the chain needs to go back to the drawing board to assess its wider business model, he concluded.

Last month, plant-based restaurant chain Planta filed for Chapter 11 bankruptcy protection in a move to reduce costs.

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