99 Cents Only Stores: Chapter 11 Filing and Potential Lifeline
The landscape of retail often sees a bittersweet conclusion when a chain hires a liquidation firm. While the brand name may sometimes resurface, often it does so in a significantly altered form. Once a company opts for liquidation, it has typically exhausted all avenues to remain operational, including seeking new funding and exploring potential asset sales.
Recent Retail Liquidations
For instance, David’s Bridal faced a similar fate when it filed for Chapter 11 bankruptcy but was saved by an investor who took over the brand. Conversely, popular retailers like Christmas Tree Shops, Tuesday Morning, and Bed Bath & Beyond exhausted their options, leading to the appointment of a liquidation firm to sell their remaining assets. This resulted in the closure of their stores as we knew them.
The Situation with 99 Cents Only Stores
Currently, it seems 99 Cents Only Stores is heading down a similar path, having engaged Hilco Global, a liquidation firm, to manage the wind-down of its operations. On April 4, the company announced plans to close all its stores.
“The company has entered into an agreement with Hilco Global to liquidate all merchandise owned by the company and dispose of certain fixtures, furnishings, and equipment at the company’s stores,” the announcement stated. Sales under this agreement began on April 5, 2024, across all 371 store locations.
Real Estate Asset Sales
In addition to liquidating inventory, the bankrupt chain is also taking steps to sell its real estate assets. Hilco Real Estate is tasked with managing the sale of both owned and leased properties in Arizona, California, Nevada, and Texas.
Founded in 1982, 99 Cents Only Stores LLC operates nearly 371 stores throughout California, Texas, Arizona, and Nevada. The chain differentiates itself from typical dollar-store models by offering fresh produce and a wide range of attractively priced merchandise.
A Potential Lifeline
In a surprising turn of events, former value retail chain executive Mark J. Miller has formed a consortium aimed at rescuing part of the 99 Cents Only chain. Miller, the former president of Big Lots and Pic ‘N’ Save, is leading efforts to acquire 143 stores in Southern California, with plans to rebrand them focusing on a “treasure hunt” shopping experience.
Given that the company has formally filed for Chapter 11 bankruptcy, any sale would require court approval. However, bankruptcy courts typically favor bids that aim to keep stores operational, as seen in the case of David’s Bridal.
“It’s a passion for me to try and do this deal because I think it’s such an iconic brand name and has such a great feel for Southern California,” Miller expressed in an interview with Los Angeles Magazine.
Miller has spent about 90 days assembling his bid for the company. Although the Chapter 11 filing complicates the situation, it does not entirely preclude the possibility of a successful acquisition.
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