The Children's Place - Chapter 11 Case Summary

Business Description

Headquartered in Secaucus, NJ, The Children's Place, Inc. (Nasdaq: PLCE) ("TCP"), together with its debtor affiliates (collectively, the "Debtors") and certain non-debtor affiliates (collectively with the Debtors, the "Company"), is a pure-play children's specialty retailer selling under The Children's Place and Gymboree brands. The Company designs, contracts to manufacture and sells apparel, accessories and footwear for girls and boys, toddlers and babies, mostly at value prices. The Children's Place is its core value-oriented brand, and Gymboree is a more premium offering.

At filing, the Company's network comprised 512 stores in North America, two digital storefronts, a wholesale business that includes a relationship with Amazon, and 323 international points of distribution in 13 countries run by franchise and wholesale partners. TCP's controlling stockholder is Mithaq Capital SPC, a Cayman company ("Mithaq").

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Corporate History

Founding and the Gymboree Brand

The Children's Place was founded in 1969 and listed on the Nasdaq Global Select Market in 1997. After Gymboree Group's restructuring, the Company bought certain Gymboree intellectual property and related assets. It then relaunched the brand across its digital and other distribution channels.

Mithaq Ownership

In 2024, Mithaq acquired more than 50% of TCP's outstanding common stock and became its controlling stockholder. During the same year, on February 29 and April 16, 2024, Mithaq lent the Company approximately $168.6 million of subordinated debt. In February 2025, Mithaq increased its stake by subscribing for shares in a rights offering open to all stockholders, in exchange for a further reduction of its unsecured debt. As of August 14, 2026, the date of its most recent Schedule 13D amendment, Mithaq beneficially owned approximately 61.1% of TCP's outstanding common stock.

Corporate Structure

TCP, a Delaware corporation, is the ultimate parent of each Debtor and of various non-debtor subsidiaries. The Debtors are mainly the Company's U.S. (including Puerto Rico) and Canadian subsidiaries. These include The Children's Place (Canada), LP ("TCP Canada"), an Ontario limited partnership, along with its general partner, TCP Investment Canada II Corp., and its limited partner, TCP Investment Canada I Corp. (together with TCP Canada, the "Canadian Debtors"). The non-debtors are the Company's foreign subsidiaries. They provide sourcing, import/export, customer service and information technology support, and they make limited wholesale and online retail sales.

Board and Management

On October 2, 2026, TCP appointed Elizabeth A. LaPuma to its board and audit committee. On October 30, 2026, Kim Roy resigned from the board, and the board appointed two Co-Chief Restructuring Officers: Rudolph Morando, a Managing Director of Berkeley Research Group, LLC ("BRG"), and Chris McAvinn. On November 1, 2026, Muhammad Asif Seemab resigned as Chief Executive Officer and Muhammad Umair resigned as Chief Strategy Officer. The board now has six directors: Turki Saleh A. AlRajhi, Seemab, Hussan Arshad, LaPuma, Rhys Summerton and Umair. According to the Debtors, three of them, including LaPuma, are independent.

On November 3, 2026, the board formed a special committee (the "Special Committee") with LaPuma as its only member. The Special Committee has sole and exclusive decision-making authority over specified matters, including financing and sale transactions and the Chapter 11 filing. It is also authorized to investigate potential claims against current or former officers and directors, shareholders and other insiders.

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Operations Overview

Segments

The Company reports two geographic segments:

• The Children's Place U.S. — Covers the U.S. (including Puerto Rico) stores, the U.S.-based wholesale business and the e-commerce businesses. It also runs certain functions for the whole Company: inventory procurement, such as production and design, and corporate overhead, including executive management, finance, real estate, human resources, legal and information technology.
• The Children's Place International — Covers the Canadian stores and revenue from international franchisees. The costs of functions run by the U.S. segment, including depreciation and amortization, are allocated to this segment mainly in proportion to net sales.

Most of the Debtors' revenue comes from selling apparel, accessories and footwear to consumers in stores and online. Wholesale sales add to this, as do royalty and product revenue from international franchise and wholesale partners.

Sales Channels

• Retail stores — The Company's main revenue driver: Company-operated stores across the U.S. (including Puerto Rico) and Canada under both brands. TCP Canada runs the Canadian stores, which were 56 leased locations across nine provinces at filing. It relies on the U.S. segment for management, corporate and shared services, and merchandise sourcing and distribution.
• E-commerce — The main sites, childrensplace.com and gymboree.com, sell substantially the same merchandise as the stores plus online-only items. They also support buy-online-pickup-in-store and ship-from-store fulfillment.
• Amazon wholesale — The Debtors' wholesale relationship with Amazon brings in new customers, including value-conscious shoppers who might not otherwise visit the Debtors' stores or websites.
• International franchise — The Company earns revenue from ten international franchise and wholesale partners through product sales and sales-based royalties. This gives the brands an international presence without the capital cost of Company-operated stores.

Distribution and Sourcing

The Debtors operate a distribution center of approximately 700,000 square feet in Fort Payne, Alabama, and use third-party facilities for e-commerce fulfillment and other operations. The Company designs, sources and contracts to manufacture most of its branded products. It has sourcing offices in Hong Kong, Pakistan, Kenya, China, India, Ethiopia and Indonesia. Bangladesh and Vietnam each supplied more than 15% of sourced merchandise in fiscal 2025. This sourcing model exposes the business to tariffs, freight costs, trade policy, geopolitical developments, unstable foreign manufacturing conditions and international transportation disruptions.

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Prepetition Obligations

At filing, the Debtors' funded debt had three debt facilities:

• an asset-based revolving facility with Wells Fargo Bank, National Association ("Wells Fargo") as agent (the "ABL Credit Facility");
• a term loan with Crystal Financial LLC d/b/a SLR Credit Solutions ("SLR") as agent (the "SLR Term Loan"), secured alongside the ABL Credit Facility under an intercreditor agreement dated December 16, 2025; and
• unsecured promissory notes held by Mithaq (the "Mithaq Term Loans"), which rank behind both by contract.

The Company also reported approximately $141.2 million of accounts payable.

• ABL Credit Facility — A $350 million revolver under an Amended and Restated Credit Agreement originally dated May 9, 2019, last amended by a Ninth Amendment dated September 24, 2026. Wells Fargo is administrative and collateral agent. At filing, approximately $110.6 million of borrowings and $19.4 million of standby letters of credit were outstanding. The borrowers are TCP, The Children's Place Services Company, LLC, TCP Canada, TCP Brands, LLC and The Children's Place International, LLC, and certain other subsidiaries are guarantors. The facility has a first lien on substantially all of the Debtors' assets except the SLR Term Loan's priority collateral, where it has a second lien.
• SLR Term Loan — A $100 million term loan dated December 16, 2025, last amended by a First Amendment dated September 24, 2026. SLR and affiliated SLR entities are the lenders, and SLR is administrative and collateral agent. The full principal was still outstanding at filing. The Debtors used the net proceeds to pay down part of the ABL borrowings. The loan matures on the earliest of three dates: December 16, 2030; the ABL Credit Facility's maturity date; or 91 days before the maturity of any other material indebtedness above $9 million in aggregate principal, including the Mithaq Term Loans. It has a first lien on specified intellectual property, real estate, furniture, fixtures, equipment and equity interests of the loan parties, and a second lien on the ABL Credit Facility's priority collateral.
• Mithaq Term Loans — Four notes with approximately $151.1 million outstanding in total at filing. The proceeds paid down the Company's earlier Wells Fargo revolver (later refinanced into the ABL Credit Facility), paid part of vendor accounts payable and funded working capital. The notes rank behind the ABL Credit Facility and the SLR Term Loan in right of payment under a Second Amended and Restated Subordination Agreement dated December 16, 2025 among Wells Fargo, SLR, Mithaq and the Debtors. That agreement was amended by a First Amendment dated September 24, 2026.
  • First note — Dated February 29, 2024, for up to $78.6 million. It was reduced by $60.2 million in connection with the February 2025 rights offering, leaving approximately $18.4 million outstanding as of August 1, 2026.
  • Second note — Dated April 16, 2024, for an additional $90 million.
  • Third note — Dated July 1, 2026, for $15 million, the first advance under a $40 million commitment letter.
  • Fourth note — Dated September 24, 2026, for $25 million, the rest of the commitment.

The Debtors' First Day Declaration puts the amount outstanding under the ABL Credit Facility as of November 6, 2026 at approximately $130.5 million in its opening summary, while its debt table lists $110.6 million of borrowings and $19.4 million of letters of credit as of the same date.

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Events Leading to Bankruptcy

Market and Cost Pressures

The Declaration attributes the Company's decline to falling demand for value-oriented children's apparel, persistent cost inflation, high tariffs on imported goods, and growing competitive and promotional pressure from traditional retailers and e-commerce entrants. According to the Debtors, consumers have moved discretionary spending toward value-oriented and digitally native retailers, while inflation and tariffs raised the cost of goods sold. U.S. segment sales also fell because of lower direct-to-consumer traffic, planned cuts in wholesale shipments and the sell-off of aged fashion inventory. Together these reduced gross profit dollars against a large fixed-cost base.

During fiscal 2025 and fiscal 2026, the Company paid approximately $40 million of tariffs imposed under the International Emergency Economic Powers Act. It received approximately $39 million of tariff refunds, excluding interest, in the second quarter of fiscal 2026. By then, however, it had already monetized most of those refund claims and used the proceeds mainly to pay down short-term debt.

Financial Performance

Net sales fell from approximately $1.4 billion in fiscal 2024 to approximately $1.2 billion in fiscal 2025. Comparable retail sales dropped approximately 8.4% that year, and gross profit declined materially. The decline continued in fiscal 2026. For the 26 weeks ended August 1, 2026, net sales fell approximately 15.4% to approximately $457 million, from approximately $540.1 million a year earlier. The net loss for that half-year grew to approximately $84.1 million, up from approximately $39.4 million. According to the Debtors, store occupancy, distribution, technology and corporate costs could not be cut proportionately or immediately as revenue fell.

The losses strained liquidity in a business that has to buy seasonal inventory ahead of the back-to-school and holiday selling periods. Accounts payable became increasingly past due as the Debtors tried to preserve cash. TCP announced its second-quarter fiscal 2026 results on September 14, 2026. The next day, September 15, its stock fell approximately 23.8% to $1.90 per share, and it has continued to trade at depressed levels.

Refinancing and Cost Initiatives

Starting in fiscal 2025, management and the TCP board pursued refinancing, liquidity and operational initiatives. In December 2025, the Company refinanced its senior capital structure by amending the ABL Credit Facility and taking out the new SLR Term Loan. Mithaq then made additional unsecured advances in July and September 2026. According to the Declaration, these transactions provided meaningful liquidity, but the Company still carried substantial funded debt, interest expense and fixed costs while performance kept deteriorating.

The Company identified more than $100 million of run-rate cost savings it could act on. These came from organizational redesign, store footprint rationalization, distribution and supply chain efficiencies, and corporate overhead reductions. Inventory fell by more than $100 million between August 2, 2025 and August 1, 2026. The Declaration describes these measures as ongoing and as not having offset the size of the revenue decline and operating losses.

Advisors and Marketing Process

Starting in September 2026, the Debtors hired BRG as financial advisor, Cascadia Capital, LLC ("Cascadia") as investment banker and White & Case LLP as restructuring counsel. The strategic options they evaluated included:

• a going-concern sale of all or substantially all assets;
• a standalone sale of the Gymboree brand and related intellectual property; and
• a new "IPCo" structure, in which certain intellectual property would be kept and licensed to wholesalers and retail store operators while the other assets were liquidated or sold to a third party.

Working with their advisors, the Debtors decided they needed to substantially shrink the store footprint to match current and projected customer demand and to preserve liquidity. They hired A&G Realty Partners, LLC to analyze the lease portfolio and support lease negotiations with landlords.

In September 2026, Cascadia and management launched a marketing process. It sought buyers for the whole business, either as a going concern or in liquidation, and for separate assets or revenue streams such as the Gymboree brand and the Debtors' Amazon operations. Cascadia contacted approximately 33 strategic and 17 financial prospects. Many of them signed confidentiality agreements and received access to an electronic data room. The Debtors have received nine proposals. Six are for going-concern and intellectual property transactions, and three are "equity" liquidation proposals covering substantially all assets. Negotiations to improve those bids are continuing.

Lender Reserves

Liquidity kept deteriorating. On or around October 7, 2026, the Debtors' secured lenders imposed a $15 million restructuring reserve against availability under each of the ABL Credit Facility and the SLR Term Loan, for a combined reserve of $30 million. An additional $5 million reserve was then implemented under each facility on each of October 21, October 28 and November 4, 2026.

Liquidation Consultant

With the holiday season approaching, the Debtors decided to run an orderly liquidation of inventory and store closures through a consultant paid on a fee basis. They made this decision after discussions with their advisors and stakeholders, including the secured lenders. The Debtors received three proposals from national liquidation firms. With the Special Committee's approval, they selected Tiger Capital Group, LLC, SB360 Capital Partners, LLC and GA Retail Solutions, LLC (collectively, the "Consultant") to liquidate inventory and certain other assets while the going-concern marketing continued. The Debtors signed a consulting agreement with the Consultant on November 3, 2026 (the "Consulting Agreement"). It pays the Consultant a percentage fee and allows store closures to be halted if a going-concern bid becomes actionable. Liquidation sales began on November 6, 2026.

The Debtors and their advisors discussed out-of-court and Chapter 11 options with the lenders, Mithaq, vendors and other stakeholders. The Debtors then decided to file so they could continue the store closure sales while running a going-concern sale process at the same time.

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Chapter 11 Filing

The Debtors filed for Chapter 11 on November 8, 2026 in the District of New Jersey. They plan to continue the orderly inventory liquidations while running an in-court process to find higher and better bids for their operating assets and intellectual property.

Sale Process

The Debtors filed a bidding procedures motion to govern a postpetition marketing and sale process for their assets, including bids for substantially all of the assets. The proposed procedures would let the Debtors name one or more stalking horse bidders for all or part of the assets and grant them bid protections. If needed, an auction would select the highest or otherwise best bid.

Inventory Liquidation

Alongside the sale process, the Debtors will continue inventory sales at all of their retail locations under the Consulting Agreement. They expect the sales to run through February 28, 2027, and expect the proceeds and eventual labor-cost savings to provide liquidity. A store liquidation motion asks the court to:

• approve the Debtors' assumption of the Consulting Agreement;
• allow the Debtors to continue, and where applicable start, sales under specified guidelines, free and clear of liens, claims and encumbrances; and
• allow changes to customer programs at the closing stores.

The guidelines for the Canadian stores also need approval from the Ontario Superior Court of Justice (Commercial List) (the "Canadian Court").

DIP Financing

Before filing, Cascadia marketed a debtor-in-possession ("DIP") loan while the Debtors negotiated with Wells Fargo and SLR over more funding and use of cash collateral. According to the Debtors, the existing secured lenders offered the only viable postpetition funding. The Debtors are now asking the court to approve two superpriority facilities from those lenders (together, the "DIP Facilities"). The same motion seeks use of cash collateral and adequate protection. Over time, the DIP Facilities would refinance the prepetition ABL Credit Facility and SLR Term Loan obligations, including by rolling them up into the DIP debt:

• DIP ABL facility — An asset-based revolver of up to $166 million (the "DIP ABL Facility"), with Wells Fargo as administrative and collateral agent. Availability would depend on a borrowing base, applicable reserves and other borrowing conditions.
• DIP term facility — A term loan of up to $116 million (the "DIP Term Facility"), with SLR as administrative and collateral agent.
• New money — Once the court approves the DIP Facilities, the Debtors would have access to over $11 million of new liquidity.
• ABL roll-up — After the interim DIP order, collections from ABL collateral would go first to repaying prepetition ABL obligations, while DIP advances fund operations. Existing letters of credit, cash-management obligations and bank-product obligations would become DIP ABL Facility obligations when the interim order is entered. Any remaining prepetition revolving loans would roll into the DIP ABL Facility when the final order is entered.
• Term loan roll-up — $16 million of prepetition SLR Term Loan obligations would roll into the DIP Term Facility when the interim DIP order is entered, and the rest would roll up on final approval.
• Security — Liens on substantially all of the Debtors' assets plus superpriority administrative expense claims, subject to the applicable lien priorities and the carve-out in the DIP order.
• Budget — The DIP Facilities would be subject to a DIP budget attached to the interim DIP order, funding budgeted employee, occupancy, distribution, inventory-sale, critical vendor and case-administration expenses.
• Milestones — Entry of a final DIP order, entry of one or more sale orders, and closing of the asset sale or sales, all by deadlines in December 2026.

The Declaration characterizes the DIP Facilities as the product of arm's-length negotiations and the best financing available to the Debtors.

Canadian Recognition

The Debtors filed a motion asking that TCP be authorized to act as foreign representative under section 1505 of the Bankruptcy Code. If appointed, TCP would ask the Canadian Court to recognize the Chapter 11 cases as a "foreign main proceeding" under Part IV of the Companies' Creditors Arrangement Act. It would also ask the Canadian Court to recognize and enforce certain first day and other orders in Canada, including a charge securing the Canadian Debtors' obligations under the DIP Facilities. Shortly after filing, TCP applied to the Canadian Court for an interim stay of proceedings in Canada until the Bankruptcy Court rules on its appointment. The interim stay was granted.

Key Dates

• December 8, 2026 – Deadline for entry of the final DIP order (proposed DIP milestone)
• December 9, 2026 – Bid deadline (proposed)
• December 11, 2026 – Auction (proposed)
• December 15, 2026 – Sale hearing (proposed)
• December 17, 2026 – Deadline for entry of sale order(s) (proposed DIP milestone)
• December 31, 2026 – Deadline for closing of the asset sale(s) (proposed DIP milestone)

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First Day Motions

The Debtors are asking for authority to keep running streamlined operations so they can still pursue a sale. The requests include:

• Wages — Pay prepetition wages, salaries and other compensation, and continue benefits programs.
• Customer programs — Keep existing customer programs running and honor related prepetition obligations.
• Cash management — Keep the cash management system, existing bank accounts and business forms, and continue ordinary-course intercompany transactions. The motion also seeks an interim extension and final waiver of the section 345(b) deposit and investment requirements.
• Critical vendors — Pay prepetition claims of certain critical vendors, foreign vendors, 503(b)(9) claimants and lien claimants. The motion also seeks administrative expense priority for undisputed obligations on outstanding orders.
• Insurance and surety — Keep insurance and surety coverage and the surety standby letters of credit, and pay related prepetition obligations. The motion also seeks authority to renew, supplement, modify or purchase coverage, pay broker fees and honor premium financing agreements.
• Utilities — Approve the proposed adequate assurance of payment and the procedures for resolving requests about it, and bar utility providers from altering, refusing or discontinuing service.
• Taxes — Pay certain taxes and fees.
• NOL trading — Set notice and hearing procedures for certain transfers of common stock and for declarations of worthlessness of common stock.
• Contracts and leases — Approve procedures for rejecting or assuming executory contracts and unexpired leases.