Maybe you haven’t heard of Franchise Group Inc. (FRG), but it owns the Vitamin Shoppe and a couple of other retailers. The company has just declared bankruptcy amid heavy losses and rising debt levels.
The company has announced a plan to restructure its finances by working with holders of about 80% of its major debt. This plan aims to strengthen the company's financial situation and help its main brands—Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings, overcome their financial headwinds and grow.
The restructuring plan involves converting the company's debt into ownership shares, which will significantly reduce its debt and improve its financial health. This change is intended to benefit the brands as well as their stakeholders.
To carry out this plan, FRG and its businesses have started voluntary Chapter 11 bankruptcy proceedings in the U.S. Bankruptcy Court in Delaware. However, the franchised locations of FRG's brands are not included in this process.
$250 million in financing
As part of the restructuring, the company has secured $250 million in financing to maintain operations and meet commitments to employees, customers, vendors, and franchise partners. This financing is subject to court approval.
Andrew Laurence, FRG's President and CEO, said the move is crucial for the growth of the businesses, which will continue normal operations during the bankruptcy process.
FRG has also announced it will shutter American Freight due to ongoing economic challenges. Store closing sales will start on November 5, both in stores and online.
The company is filing motions with the court to ensure normal business operations continue for Pet Supplies Plus, The Vitamin Shoppe, Buddy's Home Furnishings, and FRG. These motions include requests to keep paying employees and maintaining customer programs, the company said.