Franchise Group Inc. has announced that it, along with its affiliates, has initiated voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court located in Delaware. It's important to note that the franchised outlets of FRG's various brands are not part of these proceedings.
Franchise Group has also disclosed that it has entered into a restructuring support agreement with holders of nearly 80% of its first lien debt. This agreement outlines a comprehensive plan aimed at fortifying FRG's capital structure, ensuring the continued growth and success of its prominent brands - Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings.
The restructuring support agreement proposes converting the first lien debt into 100% equity of the reorganized company. This move is designed to significantly reduce the company's debt, improve liquidity, and solidify the overall enterprise, benefiting brands like Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings and their associated stakeholders.
Under the restructuring plan, the group of first lien lenders has pledged $250 million in debtor-in-possession financing. This financial commitment will offer FRG sufficient liquidity to continue operations seamlessly across its brands and meet ongoing commitments to employees, customers, suppliers, franchise partners, and other stakeholders of FRG, Pet Supplies Plus, The Vitamin Shoppe, and Buddy's Home Furnishings as part of normal business activities.
