Vitamin retailer GNC declares bankruptcy following COVID-19
25 Jun 2020 --- Health and wellness brand GNC has filed a voluntary petition for a Chapter 11 bankruptcy case. Having been under financial pressure for several years, US-based GNC suffered a further “dramatic negative impact” from the economic fallout stemming from the COVID-19 pandemic. The company now plans on selling its business to Harbin Pharmaceutical Group Holding, an affiliate of GNC’s largest shareholder, for US$760 million. GNC expects to confirm a standalone plan of reorganization or consummate a sale that will enable the business to exit from this process this fall.
In further debt relief strides, GNC has secured approximately US$130 million in additional liquidity. Some of this is through a commitment from certain of its term lenders to provide US$100 million in “new money” debtor-in-possession financing. Meanwhile, US$30 million will come from certain modifications to the existing asset-based lending (ABL) credit agreement. The company is “confident” that between financing and cash flow from normal operations, it will “meet its go-forward financial commitments as it works to achieve its financial objectives.”
“GNC remains open for business and we fully expect to continue bringing our consumers the highest-quality, most-trusted health, wellness and performance products to help them live well, longer. GNC continues to serve consumers through our retail stores in many areas and we are offering safe and convenient curbside pick-up at shopping plaza locations,” the company states.
Part of the bankruptcy filing includes closing at least 800 to 1,200 “underperforming stores,” having already identified the first 248 set to close in the US and Canada. “By doing so, we will be exiting unfavorable lease terms burdening our business more quickly and shifting resources to our standalone store locations where we are seeing significantly more consumer foot traffic,” the company states.
US and international franchise partners and all corporate operations in Ireland are separate legal entities and are not a part of the filing.
With an eye on the future, GNC states it will continue to commit to delivering wellness solutions to its consumers through easier and enhanced options, ranging from a strong product pipeline to an improved e-commerce experience. “The company will be launching the option to buy online and pick-up in-store later this year and has a robust innovation pipeline of ingredients and products to bring to market over the next three years,” it states.
The First Day Hearing will be held today (June 25) before the US Bankruptcy Court for the District of Delaware. This hearing will be held telephonically via CourtCall and, in certain circumstances, by video via Zoom.
In January, NutritionInsight reported that US-based GNC was set to partner with Renmintongtai, the pharmacy chain of Harbin Pharmaceutical Group, as well as launching four supplements in China.
Edited by Anni Schleicher
