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Things Remembered: Navigating Rough Waters in Chapter 11

The retail industry continues to feel the pain of intense competitive pressure and challenging business dynamics. Changes in recent years have resulted in an unprecedented number of store closings and Chapter 11 filings, with many of the country’s most recognizable brands shutting down operations.

Chapter 11 is obviously a difficult process and in many cases results in complete liquidation of the business. There are exceptions, however, as the recent situation with Things Remembered illustrates. This case demonstrates the positive results that can be achieved in Chapter 11 when stakeholders and advisors work collaboratively and aggressively to transform the business and enhance capabilities to move forward in an omnichannel environment.

In February 2019, Things Remembered filed for Chapter 11 bankruptcy. At that time, the company operated more than 400 stores in 43 states and employed more than 4,000 people. The difficulties experienced by mall-based retailers like Things Remembered are well documented; malls across the country have suffered severe declines in customer traffic caused in large part by increased online shopping and a drastic change in customer shopping preferences. Things Remembered was no exception to the trend. When it filed for Chapter 11 protection, the company was on the verge of liquidation—obviously the least desirable outcome.

Within Chapter 11, substantially all of the company’s assets were sold to a strategic buyer, allowing the company to survive and prosper as a more financially sound and strategically capable entity. For professionals and stakeholders involved in the Things Remembered bankruptcy case, the process serves as a reminder of the positive results that can occur when advisors, company management, lenders, and other involved parties work together in an aggressive and transparent process to drive positive change.

As the effort to restructure Things Remembered took shape, objectives were established, and an aggressive approach was employed to help carve out a successful Chapter 11 process. Stores and jobs would be cut, but the team developed a go-forward business plan that would preserve at least 50 stores and would establish a foundation for success for Things Remembered as an omnichannel retailer. In the end, 175 stores survived, more than 1,000 jobs were preserved, and the brand survived as a viable entity. This was not by chance. There were many key drivers of this successful transformation.

Early Engagement of Critical Stakeholders

In situations like this, it is critical to work closely with key constituencies to stabilize the business and position the company for go-forward transformation and value creation for all parties.

At Things Remembered, the board of directors and lenders were kept apprised of the situation and progress on key aspects of the process. Transparency was nonnegotiable. This created a high level of trust among financial advisors, lenders, the board, and company management.

The authors’ firm was engaged by the company from January 2017 to April 2018 and reengaged in October 2018 to begin Chapter 11 preparations. The firm assisted the company through a CEO transition, which created a strong working relationship and level of trust when the new executive came on board. The firm had a continual on-site presence within the finance department that led to strong working relationships and high levels of trust with executives, midlevel managers, and company staff. This enabled efficient and aggressive development of data collection and analyses with a team of only two to three people from the firm. The analytics proved invaluable as the Chapter 11 process moved forward.

Eventually, individuals from the firm filled the roles of CRO and CFO. The strong relationships that had already been developed allowed them to step quickly into these interim management roles in advance of the bankruptcy filing.

Alternative Go-Forward Business Plans

Development of wide-ranging options relating to go-forward business plans allowed the company to market to and attract a range of potential acquirers. Options included plans for an internet-only business, a store-centric/smaller footprint business approach, and a larger store-footprint option with new investment, among others.

In the end, three bids were received: two were e-commerce-only bids, and the other was a smaller footprint, store-focused bid, which the company accepted after all options were evaluated.

Flexibility in the bidding process enabled the company to carve out nonessential assets (e.g., home office building) and allowed the potential buyers to focus on the core assets they required for future opportunities. This maximized the recovery value to creditors while increasing the likelihood of completing a successful deal.

The development of wide-ranging options for the emergent business also served to drive an extremely fast sale process, thus minimizing the risk to the acquirer and increasing the likelihood of the deal closing. It took just 30 days from bankruptcy filing to 363 sale close.

Store-by-Store Due Diligence

A key objective in the Things Remembered Chapter 11 process was to maximize the number of physical stores that could continue operating post-bankruptcy. To this end, the stalking-horse buyer ran secondary store-by-store diligence in parallel with the liquidation process. Stores began going-out-of-business (GOB) sales prefiling in some cases, but the buyer had an option to purchase additional stores beyond its minimum commitment for 50 stores.

The buyer’s ultimate acquisition of 175 stores was due in large part to establishing the minimum store commitment at a low enough level and quickly initiating GOB sales. This helped the buyer to negotiate new leases with landlords, ultimately allowing for a far greater number of stores to be sold and to survive. A mechanism in the sale contract allowed for purchase price adjustments based on the ultimate number of stores acquired, so an increased store count was in both the buyer’s and seller’s interests.

All parties involved wanted to see a sale, not a liquidation, of the 50-year-old brand. By increasing the number of stores it acquired, contingent on rent reductions from landlords, the buyer would obtain a larger company positioned for higher EBITDA. Because Things Remembered provided severance and outplacement services to employees who lost their jobs in the transition, the company avoided some severance and winddown expenses as the number of stores acquired increased. The final result, selling 175 stores and the e-commerce business, was a win for all sides.

Aggressive Liquidation Schedule

Speed to results is always an objective for restructuring professionals, but it was even more critical in this situation. A drawn-out bankruptcy would have likely resulted in a liquidation—a result no one wanted. The company was entering its seasonal low point for sales activity (February/March) and did not have sufficient funds or trade credit to survive until the critical spring season (April to June). GOB sales ran for only five weeks. This condensed timeline allowed the company to maximize the benefit of the Valentine’s Day holiday in February and avoided additional overhead costs and expenses associated with prolonged GOB sales.

The aggressive approach also served to entice landlords to negotiate with the buyer, knowing that a store was in the process of liquidating and could only be saved if acted upon quickly. This led to approximately 125 additional stores having their GOB sales ended early and surviving following the renegotiation of lease terms between the landlord and the acquirer.

Critical Vendors

Success in this effort depended heavily on ensuring shipments of spring product. Vendors were anxious to ensure that products that had already been produced could be shipped—and that they would get paid. Given the seasonal nature of the spring product assortment, time was of the essence to meet global freight schedules. In exchange for payment on spring orders, critical trade vendors agreed to release approximately $5 million of spring orders.

Payment for spring goods was a key deal point negotiated in the agreement with the buyer and ensured that shelves would be stocked for the critical spring “second season,” which includes Easter, first communions, graduations, and the Mother’s Day and Father’s Day holidays. With these assurances, vendors shipped product, and the buyer could feel confident that it was buying a going concern business that would be positioned appropriately to benefit from the sales spike associated with these key selling periods. Most critical, vendors were assured that seasonal-specific product could be moved and they would receive payment.


The experience at Things Remembered was a win for all parties involved. The loss of jobs and closed stores was obviously difficult—it is never easy to see the impact of these situations on employees and communities served by the stores that close their doors. However, in terms of a Chapter 11 process and company restructuring, this case met the critical criteria for success:

  • Advisors, company management, and key constituencies were aligned on key initiatives.

  • The team took an aggressive approach to efforts to maximize value of GOB sales, lease agreements, vendor negotiations, etc.

  • Rapid execution led to positive results.

  • Key supplier and stakeholder relationships were enhanced. All parties were involved, and transparency was nonnegotiable.

  • Activities were monitored closely and communicated widely.

By taking an aggressive posture and driving transparency and effective communication among all involved in the process, the company was able to get ahead of the challenges and react in a positive manner to opportunities that presented themselves—from success in the GOB process to vendor relationships and negotiations with the leaseholders and other stakeholders. The sense of urgency incentivized landlords to negotiate new lease terms for go-forward business under new owners and to take advantage of the flexibility built into the deal with the stalking-horse buyer.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions, position, or policy of Berkeley Research Group LLC or its other employees and affiliates.

Bob Duffy

Bob Duffy

Berkeley Research Group LLC

Bob Duffy is a managing director in BRG Corporate Finance and specializes in performance improvement and restructuring. He has more than 30 years of experience, including serving as an advisor to private equity firms, corporations, lenders, and boards of directors of underperforming businesses and companies in transition. He also has served as CRO and COO for clients. With experience in a number of industries, Duffy has led successful engagements in the United States and throughout the world.

Brett Witherell

Brett Witherell

BRG Corporate Finance

Brett Witherell is a director in the BRG Corporate Finance practice and is based in Boston. He has nearly 20 years of experience and has held numerous restructuring, consulting, and financial roles focused on liquidity management, financial planning and analysis, strategy, and risk management. On his engagements, Witherell has also served in interim management roles, including CFO and treasurer.

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