Franchise Group, Inc., which owns The Vitamin Shoppe, is filing for Chapter 11 Bankruptcy in Delaware, Ohio. The Vitamin Shoppe is open for business and is continuing to serve customers as usual, both in-store and online.

Franchise Group’s other companies, Pet Supplies Plus and Buddy’s Home Furnishings, will also remain open for business while American Freight is being wound down and commencing store closing sales at locations nationwide and online on Nov. 5.

Franchise Group, Inc. (FRG) said it has entered into a restructuring support agreement (RSA) with holders of approximately 80% of its first lien debt on a comprehensive solution to strengthen FRG’s capital structure and best position its brands for sustainable growth

The RSA contemplates the proposed equitization of the first lien debt into 100% of the equity in the reorganized enterprise, which would substantially reduce the company’s debt, enhance liquidity, and strengthen the enterprise for the benefit of FRG brands and their stakeholders, the company said.

As part of the restructuring plan, the first lien lender group has committed $250 million in debtor-in-possession financing which, subject to Court approval and together with cash on hand, will provide FRG with liquidity to maintain operations across its businesses and fulfill commitments to employees, customers, vendors, franchise partners, and other stakeholders of FRG, Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings.

“Today’s announcement to de-lever our balance sheet is a pivotal step forward in enabling our market-leading businesses Pet Supplies Plus, The Vitamin Shoppe, and Buddy’s Home Furnishings to realize their full potential,” said Andrew Laurence, FRG’s President and CEO. “Each of these businesses has a demonstrated value proposition and provides great products and services to customers, which they will continue to do seamlessly during this process. Strengthening FRG’s balance sheet will allow us to enhance our support for these businesses as they advance their growth trajectories.”

As part of this strategy, FRG has determined to wind down American Freight, which has struggled due to sustained inflation and macroeconomic challenges facing the large durable goods sector. It will be commencing store closing sales at locations nationwide and online on November 5.

The Company is filing with the Court a series of customary motions to maintain business-as-usual operations on all fronts for Pet Supplies Plus, The Vitamin Shoppe, Buddy’s Home Furnishings, and FRG during the process. These “first day” motions include requests to continue to pay wages and provide benefits to employees in the ordinary course and offer customer programs. Vendors of the go-forward operating businesses will be paid in the ordinary course for authorized goods received and services rendered after the filing.

As part of this process, FRG also intends to engage in a marketing process via Court-approved bidding procedures, which will ensure that the company is maximizing value and best positioning its operating businesses for long-term success as it pursues confirmation of the agreed-upon prearranged Chapter 11 plan.

Court filings and other information regarding the Chapter 11 proceedings can be found at https://cases.ra.kroll.com/FRG.