It took a bankruptcy filing and a coronavirus pandemic to reveal that there’s value inside Dallas-based closeout retailer Tuesday Morning.
The retailer of gift and home merchandise has been reorganizing in bankruptcy since late May. Its business has improved enough that it filed a reorganization plan Thursday that pays creditors 100% and includes no dilution to existing shareholders.
It’s a rare outcome for shareholders to retain any value after a company exits bankruptcy. Stockholders take on the risk that a company may fail and that their shares may be worthless. Once a company seeks bankruptcy court protection, the pecking order for who is paid, and how much, rarely includes those former equity holders.
With stores closed during the pandemic and no e-commerce infrastructure, the retailer’s prospects looked dim. But as its 700 stores started to reopen, business was good. Tuesday Morning sells rugs, sheets and towels and kitchen items —