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#3 -_ 1 (1)

January 27, 2025

Source: Reuters

Jan 24 (Reuters) - A U.S. bankruptcy judge on Friday approved the Container Store's bankruptcy restructuring, allowing the retailer to cut $88 million in debt.
U.S. Bankruptcy Judge Alfredo Perez at a court hearing in Houston, Texas, overruled the objections of the U.S. Justice Department's bankruptcy watchdog to the deal's legal protections for the company's officers, directors, and lenders, finding that the Container Store had obtained consent from its creditors.

The Container Store, which filed for bankruptcy in December, will exit from bankruptcy as a private company owned by lenders including investment firms Golub Capital and Glendon Capital Management.
The company, which sells storage solutions, shelving, and custom closets, said last month that the debt deal will not impact the retailer's stores or its business operations.
The Container Store entered bankruptcy with $243 million in debt. The company's attorney Hugh Murtagh said in court that the Container Store hopes to complete its restructuring and exit from bankruptcy as soon as Monday or Tuesday, with $40 million in new additional funding provided by its lenders.

Perez said Friday that the Container Store provided creditors with sufficient notice that the deal could wipe out legal claims against company executives and lenders, and it gave creditors the opportunity to "opt out" and retain their legal claims if they wished.
"I believe that the process here worked," the judge said.
The Office of the U.S. Trustee, a division of the Justice Department, had opposed the Container Store's use of an "opt out" mechanism, saying that silence does not equal consent under Texas law.

Debates over what “consent” entails have roiled bankruptcy courts across the U.S. since last summer’s blockbuster Supreme Court ruling in Purdue Pharma's bankruptcy. In that case, the Supreme Court ruled that Purdue could not use non-consensual releases to shield its wealthy Sackler family owners from opioid lawsuits, but it did not define “consent.”
Since then, courts have split on the issue, with some judges ruling that creditors must affirmatively consent to settlements that release their legal claims. Other courts, like the one in Houston, have ruled that consent can be assumed if creditors are informed about the non-debtor release and given the opportunity to opt out.

The case is In re The Container Store Group Inc, U.S. Bankruptcy Court for the Southern District of Texas, No. 24-90627.
For The Container Store: Hugh Murtagh, George Davis, and Ted Dillman of Latham & Watkins; Tad Davidson and Ashley Harper of Hunton Andrews Kurth
For the U.S. Trustee: Ha Nguyen of the Office of the U.S. Trustee
 
 

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