How the Grinch Stole Christmas: The Liquidation of Christmas Tree Shops
Christmas Tree Shops filed for bankruptcy in May, hoping to keep most of its stores open while addressing its debt. But the company pivoted to a full liquidation in July after its store closing sales failed to meet revenue targets and Christmas Tree Shops defaulted on a $45 million bankruptcy loan. On August 16, 2023, Delaware Bankruptcy Judge Ho. Thomas Horan converted Christmas Tree Shops’ bankruptcy to a Chapter 7 liquidation, saying a court-appointed trustee should take over the bargain retail chain’s wind-down and address doubts about unpaid employee wages.
The retailer’s lawyer argued that its primary lender (Hilco Global) store-closing sales missed revenue targets by $14 million. Hilco countered that the retailer’s management exceeded its loan budget and told employees they would receive bonuses that Hilco never agreed to fund.
“It’s clear to me that there’s been a complete breakdown,” Horan said when converting the case. Horan convinced the two sides to reach a partial deal on employee wages, with Hilco affiliate ReStore Capital agreeing to pay $1.17 million to store-level employees who worked during the company’s going-out-of-business sales.
Hilco had initially argued it should not pay any more than it had budgeted in the bankruptcy loan, saying it did not trust Christmas Tree Shops’ calculation of employee wages. But Horan threatened to withhold fees from bankruptcy lawyers and professionals if any low-level employees went unpaid. “This case is not going to be run on the backs of employees, that’s just unacceptable,” Horan said. The agreement does not address wages for employees who worked at Christmas Tree Shops’ headquarters or wage claims filed by 250 workers who were laid off when the company went bankrupt. A Chapter 7 trustee will address those claims, Horan said, adding “we’re not going to forget about the home-office employees.”
The Middleborough, Massachusetts-based company had 82 stores when it filed for bankruptcy, focused on selling home decor and seasonal decoration products.
The case is Christmas Tree Shops LLC, U.S. Bankruptcy Court for the District of Delaware, No. 23-10576.
