Dive Brief:
Card and gift retailer Paper Source has filed for Chapter 11 bankruptcy with a plan to sell itself and close at least 11 stores.
The company, which runs 158 stores, has a stalking horse bid from current lenders led by MidCap Financial to buy the company and provide $16.5 million in financing.
The stalking horse bid is valued at Paper Source s debt obligations, including $16 million for a debtor-in-possession facility and $72.8 million on a first lien facility, according to court papers.
Dive Insight:
Roughly a year ago, Paper Source was a beneficiary of the fall of a rival, the card and stationery store chain Papyrus, which liquidated in early 2020. At the time, Paper Source took over 30 of Papyrus stores, expanding Paper Source s store fleet by more than 20%.
Paper Source, a Chicago-based retailer of cards and gifts, had been expanding rapidly, buying 27 store leases from bankrupt rival Papyrus. Then the COVID-19 pandemic hit, and Paper Source itself filed for bankruptcy Tuesday.
Paper Source, a Chicago-based retailer of greeting cards and gifts that had been expanding rapidly before the COVID-19 pandemic, filed for bankruptcy Tuesday. It’s the latest retailer to seek bankruptcy protection during a pandemic that left bricks-and-mortar stores closed for months. The company filed under Chapter 11 with the U.S. Bankruptcy Court for the Eastern District of Virginia, which .