Christmas Tree Shops’ bankruptcy case converted to Chapter 7

By Sarah Lizee

Olympia, Wash., Aug. 17 – Christmas Tree Shops, LLC’s Chapter 11 bankruptcy case was converted to Chapter 7 at the company’s request, according to an order filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company said the debtors started their cases with the goal of restructuring their debt through a plan of reorganization but later realized that path was not feasible.

After that, they pivoted to locating a going-concern buyer.

In June, the debtors defaulted under the final debtor-in-possession financing order, which prompted a transition to an orderly liquidation via going-out-of-business sales at the debtors’ stores starting in early July.

On Aug. 9, the DIP agent delivered to the debtors a notice of event of default, DIP termination event and carveout trigger notice.

The debtors dispute that they are in default and are in discussions with the DIP lenders regarding the August default letter including whether the debtors are no longer permitted to access cash collateral to fund the continued administration of the cases.

“With no ongoing business operations as of Aug. 12 and with uncertainty regarding the debtors’ ability to use cash collateral to fund the continued administration of these cases, the debtors have no choice but to seek conversion of these cases,” the company said in its conversion motion.

“While the debtors are disappointed in this outcome, they believe that there is no better alternative and that under these circumstances, conversion of these Chapter 11 cases to Chapter 7 is in the best interests of their estates and creditors.”

Middleborough, Mass.-based Christmas Tree Shops sells home goods with a specialty focus on seasonal products. The company filed bankruptcy on May 5 under Chapter 11 case number 23-10576.

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