The Children’s Place starts 50%-off shoe liquidation after Chapter 11

By Elena Vasquez

The Children’s Place is liquidating all stock after a Sunday-night Chapter 11 filing in a New Jersey bankruptcy court, offering children’s shoes at 50% off on a final-sale basis. Boots are marked down from $49.95 to $24.98, while toddler girls’ glitter-bow ballet flats go from $29.95 to $14.98.

Some products are online only, although most remain available in the retailer’s stores.

What does the liquidation mean for inventory economics?

The markdowns lower revenue per unit against the stated ticket price; the filing discloses no product cost, so the realized margin cannot be calculated. Final-sale status also removes returns.

The liquidation runs through a joint venture comprising GA Group, Tiger Group and SB360 Capital. No terms are disclosed for how the venture is compensated or how inventory and liquidation costs are allocated.

What happens to the company and nearly 500 stores?

The retailer operates nearly 500 stores. The company said its stores and e-commerce sites remain open while the court-supervised sale process continues.

It is seeking a buyer whose asset acquisition would allow operations to continue as a going concern. If no buyer emerges, the stores will close. The retailer also owns the twice-bankrupt Gymboree nameplate, acquired in March 2019.

Interested buyers must submit bids by Dec. 9. The court process carries an expected completion date of end-December 2026, roughly a year after the bid deadline; the company has announced no store-closing date.

“Today’s announcement marks an important step in our efforts to secure the best path forward for The Children’s Place,” said Rudy Morando, co-chief restructuring officer.

“For nearly 60 years, The Children’s Place has supported growing families with apparel that customers have come to know and love. We recognize the significance of this development for our employees, customers, vendors, and other partners, and we are committed to conducting an efficient and transparent sale process.”

What do the filings show about assets and creditors?

• The petition lists estimated assets of $742.3 million and total liabilities of $881.3 million. Liabilities exceed the asset estimate by $139 million.
• Thirteen affiliates filed alongside the retailer. The company said it will file a Canadian proceeding to recognize the assets of three Canadian affiliates as part of a foreign main proceeding and permit their inclusion in the U.S. sale process.
• Hansae Co. Ltd., based in Seoul, ranks as the largest creditor at $15.3 million. The five largest creditors are overseas firms in Korea, Hong Kong or Vietnam.
• The top 30 unsecured creditor list appears to contain no claims held by shoe firms or manufacturers; supplier claims outside that list are not detailed.

Can a buyer preserve more value than liquidation?

“The company has experienced declining sales and profitability, competitive and promotion pressures, increased costs, and significant liquidity constraints,” said Lorie Beers, managing director and head of restructuring and special situations at Cascadia Capital LLC, in a court document.

She said the retailer has received nine interested proposals, six for a going concern and three for liquidation of assets. Two-thirds of the interest therefore concerns continued operations, although the company has selected no buyer.

The stated objective is for an offer, or a combination of offers, to generate greater value than liquidation. Until buyers test the bids, that remains an objective rather than a completed transaction.

What restructuring led to the filing?

Founded in 1969, The Children’s Place began laying off 17% of its staff in June 2023 as consumer spending slowed. Liquidity issues led to a strategic review in February 2024.

By March 2024, Mithaq Capital had provided a $78.6 million interest-free, unsecured and subordinated term loan, which enabled the retailer to continue operating. The Chapter 11 petition indicates that Mithaq owns 61.1% of the equity.

What should brands and sourcing teams watch?

For brand and sourcing teams, the immediate test is whether a going-concern buyer can finance inventory, store operations and supplier obligations. The $78.6 million loan enabled continued operations, but no buyer, financing package, store-closing schedule or post-sale purchasing plan has been disclosed.

The Dec. 9 bids, creditor priorities and treatment of the three Canadian assets will be central to that decision; if no buyer emerges, nearly 500 stores will close.