Pier 1 Imports Cancels Bankruptcy Auction as Coronavirus Chills Potential Bids

Pier 1 Imports Inc. has canceled an auction to sell itself out of chapter 11 as senior lenders opted to take ownership of home-goods retailer, the latest corporate bankruptcy to be upended by the coronavirus pandemic.
The retailer’s lenders decided to trade their debt claims for equity after the company didn’t receive qualified bids by deadline. Pier 1 said it remains in active discussions with creditors “regarding how to best maximize the value” of the company’s bankruptcy estate, according to court papers filed Friday.
Despite canceling the auction, which was scheduled for Tuesday, Pier 1 can exercise its rights to hold an auction at a later time, court papers said.
Before filing for chapter 11 protection, Pier 1 had a deal with lenders including Bank of America NA, Wells Fargo Bank NA and Pathlight Capital LP that set a cash recovery price for the possible auction of $104.7 million, representing 55 cents on the dollar of what they are owed.
Under the deal, they agreed that if there was a bid for Pier 1’s assets that generated at least that much, they would automatically support the sale. If there were no bids exceeding that price, then the lenders would decide whether to take control of Pier 1 or proceed with an auction at which they could bid up to that amount, using debt as currency.
Pier 1, which filed for bankruptcy in February, closed nearly half of its nearly 940 stores it had at the time of filing. The closing included all of its locations in Canada, as well as a number of distribution centers.
In light of the Covid-19 pandemic, Pier 1 temporarily closed its stores on March 22. The company said it would continue to fulfill orders from its website with a leaner staff at certain distribution and fulfillment centers.
Last week, Pier 1 also furloughed employees and cut pay in a bid to preserve liquidity. The retailer said it was cutting pay for retained employees by 20%, and management, with titles of executive vice presidents and above, will see 50% pay reductions.