99 Cents Only plans to shutter all stores by May 31

Discount retailer 99 Cents Only Stores said this week that it planned to close all 371 of its stores by May 31.

After the company said last week that it planned to liquidate its assets, this week it filed for Chapter 11 bankruptcy at the U.S. Bankruptcy Court for the District of Delaware. In its initial round of filings, the company said it has launched going-out-of-business sales at all of its locations and has proposed completing the first round of 125 store closures by April 30.

In addition, the company said it had received an offer to provide a $60.8 million senior secured debtor-in-possession term loan credit facility. The credit facility, which is subject to court approval, includes $35.5 million that would be provided by an entity affiliated with some of the company’s existing stakeholders, the company said.

99 Cents Only and its subsidiaries “lack sufficient liquid unencumbered assets to fund the wind-down efforts, sale process, and the limited operations [they] must maintain to maximize the value of their estates without the provision of new capital,” the company said in the filings.

In the bankruptcy filing, 99 Cents Only cited assets of between $1 billion and $10 billion, and liabilities in the same range. Its 10 largest creditors are owed nearly $35 million. Other obligations include about $6.3 million in payroll owed to its 10,864 employees.

Related:99 Cents Only begins liquidation

The filings also detailed the struggles the company faced as it slid toward bankruptcy.

“Like many other retailers, the last several years have been extremely difficult for [99 Cents Only],” the company said. “The [company] faced adverse industry trends, increased competition, the COVID-19 pandemic, escalating theft and crime, and record-high inflation, all of which have had an enormous impact on its bottom line and ability to continue operations as an extreme value retailer.”

Despite “exhaustive” efforts to turn the business around, the company’s liquidity position rapidly deteriorated in the first quarter of this year, the company said.

As the company’s financial performance faltered, its vendors tightened their trade terms and many shifted to cash-on-demand terms, according to the filings. In addition, several of the retailer’s landlords issued “pay or quit” default notices.

Milbank LLP is serving as legal advisor to 99 Cents Only Stores, Jefferies LLC is serving as the company’s investment bank, and Alvarez & Marsal is serving as the company's restructuring advisor. Hilco Global is assisting the company with its liquidation, and Jefferies LLC and Hilco Global are managing the sale of the company's real estate assets.