GNC Holdings Inc. filed for Chapter 11 bankruptcy protection Tuesday with plans to sell and close up to one-sixth of its 7,300 stores worldwide.
The GNC vitamin and supplement vendor,
He blamed the presentation of the slump in sales due to the coronavirus pandemic, demands from faster payment providers, interest soon due on bond debt, and the carryover of profits from underperforming stores. Without bankruptcy financing, GNC will run out of cash to run its business in late June, according to court documents.
Bankruptcy funders have given GNC about six months to secure a sale, possibly to one of China’s largest drug makers, Harbin Pharmaceutical Group Co., or to reorganize with a lighter balance sheet, according to documents filed with the Court of United States Bankruptcy in Wilmington, Del.
The Pittsburgh-based retailer said it has reached an agreement with most of its guaranteed lenders to carry out a two-way restructuring that will preserve the business. A proposed sale to a Harbin subsidiary, CNG’s largest shareholder, is supported by most guaranteed lenders, according to the company. But, unless an auction increases Harbin’s $ 760 million bid, a sale won’t cover CNG’s $ 903 million in bank and bond debt.
An expanded version of this report appears on WSJ.com.
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