(Bloomberg) — 99 Cents Only Stores LLC has filed for bankruptcy after announcing plans in April to wind down its business operations.
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The California-based discount retailer listed assets of $1 billion to $10 billion and liabilities of a similar range in a Chapter 11 petition filed in Delaware. Filing Chapter 11 will give 99 Cents Only time to conduct going out—of-business sales at its roughly 370 locations.
99 Cents Only has secured $60.8 million in senior secured super priority debtor-in-possession financing to wind-down its operations and sell its real estate and other assets for as much as possible in order to repay its creditors, according to a statement.
The bankruptcy filing is the latest sign that many traditional retailers are continuing to struggle with competition from Internet sellers, higher interest rates and shifts in consumer spending habits. Arts and crafts supplier JOANN Inc. filed Chapter 11 in March to restructure its debt and Rite Aid Corp. recently announced a series of deals with its creditors which will save the pharmacy chain from liquidating.
99 Cents Only has battled losses for years and completed multiple sale-leaseback deals to bolster its cash reserves. More recently, inflation has continued to stress its core customer base, credit grader Moody’s Investors Service said in a November downgrade.
As of February 2, the company’s largest equity owners included funds managed by Ares Management Corp. and the Canada Pension Plan Investment Board, according to court documents. Other shareholders include funds managed by Wasserstein Debt Opportunities Master LP, Litespeed Master Fund and Vanderbilt University.
Bloomberg earlier reported that 99 Cents was exploring a debt restructuring.
–With assistance from David Hall.
(Updates with context in the second, third, fifth and sixth paragraphs.)
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