Filing Alert: Leslie's Pool Supplies Chapter 11

Leslie's, Inc., a Phoenix, AZ-based specialty retailer of swimming pool and spa supplies, filed for Chapter 11 protection on September 30, 2026, in the U.S. ...

Leslie's, Inc. and its debtor affiliates⁽¹⁾, a Phoenix, AZ-based specialty retailer of swimming pool and spa supplies, filed for Chapter 11 protection on Sep. 30 in the U.S. Bankruptcy Court for the Southern District of Texas.

The company attributes its distress to a contraction in the U.S. pool and spa care industry that began in 2023, as demand normalized after elevated pandemic-era spending on home improvement and outdoor living. Several other pressures added to the decline: persistent inflation in chemical, energy and transportation costs; lower consumer discretionary spending as interest rates rose; fewer new pool installations amid a weaker housing market; cooler-than-normal temperatures and above-average rainfall in key markets in fiscal 2024 and 2025, which shortened pool seasons and reduced chemical usage; and aggressive pricing from big box and online marketplace retailers. EBITDA fell from a peak of approximately $270 million in Q3 2021 to $40 million in Q1 2026, and the company reported significant net losses and negative free cash flow in fiscal 2024 and 2025. Beginning in October 2024, the company implemented cost-reduction initiatives, including a plan to close approximately 80 underperforming stores and one distribution center, which was substantially completed by January 2026. Over the same period, it effected a 1-for-20 reverse stock split in September 2025 and received Nasdaq deficiency notices, most recently on Sept. 25, 2026, for failing to maintain the $1.00 minimum bid price.

Around August 2025, the company began negotiations with an ad hoc group of prepetition term lenders. Talks initially focused on an out-of-court maturity extension of the approximately $757 million term loan due March 2028, together with a new-money raise, and the company ran a parallel third-party financing process between Q4 2025 and Q1 2026. As performance continued to face significant headwinds, the ad hoc group was no longer willing to proceed with a standalone maturity extension. The talks culminated in a Restructuring Support Agreement (RSA) with holders of approximately 81% of prepetition term loan claims. The plan would reduce funded debt by more than $685 million, principally through the equitization of the prepetition term loan, with term lenders receiving their pro rata share of 10% of the new common equity, subject to MIP dilution. A $60 million new-money equity investment, backstopped by certain consenting term lenders, would purchase 55.80% of the new common equity, with a further 4.20% payable as a backstop premium. GUCs, including lease rejection claims, would share pro rata in a $500,000 cash pool, and existing equity would be cancelled for no consideration. The reorganized company would emerge as a private Delaware LLC whose funded debt consists of a $75 million exit term loan and a $225 million exit ABL facility.

To fund the cases, the debtors have secured a $90 million new-money DIP term loan facility, with $45 million available upon interim approval. It bears interest at Term SOFR plus 6.50%, paid in kind, and carries a 7.00% backstop premium and a 9.50% upfront premium, both payable in DIP term loans. At emergence, $75 million of the DIP term loan would convert into the exit term loan, and the remaining DIP claims, including premiums and accrued interest, would convert into 30% of the new common equity. Prepetition ABL lenders are providing a $225 million DIP ABL facility, which includes a roll-up of the prepetition ABL obligations (approximately $30 million outstanding at the petition date). Absent DIP financing, the debtors project approximately $81 million of negative free cash flow over the initial 13-week budget, driven by the off-season filing and the need to build inventory for the 2027 pool season. RSA milestones require the plan effective date to occur within 110 days of the petition date, consistent with the debtors' stated aim of emerging in early 2027 ahead of the primary inventory buying season.

The company reports $722.2 million in assets and $1.2 billion in liabilities. The filing indicates that there will be funds available for distribution to unsecured creditors. The case number is 26-90795.

⁽¹⁾ For a complete list of debtor entities, see the Chapter 11 Debtors table.

Chapter 11 Debtors

Affiliated Debtors Chart
Source: Bondoro, Court filings

Top Unsecured Claims

Form 204 Top Unsecured Claims
Source: Bondoro, Court filings

Key Parties

Counsel:

Bankruptcy Counsel:

Investment Banker:

Financial Advisor:

Real Estate Consultant and Advisor:

Local Bankruptcy Counsel:

Signatories:

Claims Agent:

Equity Security Holders: