The festive home goods retailer, Christmas Tree Shops (often abbreviated as CTS), has officially shut its doors for the last time, marking the end of an era. With its roots tracing back to the 1950s, CTS has now entered a Chapter 7 bankruptcy, forcing the company into full-scale liquidation. Once a leading decorating mainstay in the Northeast U.S., the brand’s failure to adapt to changing consumer demands and a series of contentious courtroom disputes became a recipe for its downfall.
Financial Struggles and Chapter 7 Conversion
Despite an initial attempt to salvage its finances by closing 10 branches during its Chapter 11 bankruptcy, Christmas Tree Shops faced insurmountable difficulties, including failing to pay off its $45 million bankruptcy loan. U.S. Bankruptcy Judge Thomas Horan converted Chapter 11 into Chapter 7, liquidating the remaining 70 stores. Bullet points summarizing the challenges: Originally planned restructuring during Chapter 11. Liquidated 70 stores due to unpaid bankruptcy loan. I moved from Chapter 11 to Chapter 7 under Judge Horan’s order. Complete shutdown of all stores under the CTS brand this year.
Courtroom Contention: Disputes Over Funds and Employee Wages
A significant clash occurred between Christmas Tree Shops and Hilco Global, responsible for overseeing store closures. CTS accused Hilco of missing revenue targets by $14 million during the bankruptcy. In contrast, Hilco alleged that the CTS management had exceeded their loan payments, leading to unexpected employee wage payments. However, an affiliate of Hilco, ReStore Capital, agreed to pay $1.7 million in due wages to store-level employees. This settlement does not include Christmas Tree Shops’ headquarters employees or the 250 workers laid off during the bankruptcy. Christmas Tree Shops and Hilco Global locked horns in court, as reported by Reuters. Accusations and counter-accusations over revenue targets and loan payments. ReStore Capital agreed to settle some of the wage disputes.
Historical Overview of Christmas Tree Shops
Christmas Tree Shops started in the 1950s, founded by Mark and Alice Matthews. They opened The Christmas Tree Gift Shop in Yarmouth Port, Massachusetts. Later, in the 1970s, Charles and Doreen Bilezikian expanded the brand, establishing 24 more outlets across New England and New York. By 2003, Bed Bath & Beyond acquired and expanded the franchise, only to sell it to Handil Holdings LLC in 2020. Over the years, despite the changes in ownership and expansions, CTS faced challenges due to its inability to meet shifting consumer needs, supply chain issues, and its decision not to embrace online sales.
Employee Woes and Unsettled Bonuses
As stores were shuttering, employees who remained loyal and worked up to the stores’ final closure on August 12 were left in limbo regarding their payments. Many were also promised retention bonuses for sticking around until the end, bonuses that remain unpaid to this day. During a court hearing, it emerged that these bonuses were perhaps a “miscommunication,” with approval only for the workers at the first ten stores to close.
A Retailer’s Fall in a Challenging Market
The story of Christmas Tree Shops parallels many other retailers who have faced the harsh realities of bankruptcy and liquidation. Brands like Circuit City, Toys R Us, Linens N’ Things, and Pier 1 have all grappled with similar fates. And while some, like David’s Bridal, found saviors in the eleventh hour, others weren’t as fortunate. Even as they navigate the complex waters of Chapter 11, hope remains until a transition to Chapter 7, as was the case with CTS. In summary, the tale of Christmas Tree Shops is a stark reminder of the ever-changing retail landscape and the necessity for brands to adapt, innovate, and stay relevant.