FTD, the nearly 110-year-old floral and gifting company, has filed for Chapter 11 bankruptcy, revealing that it has enough liquidity to stay open through July but may not be able to fund operations beyond then. The company already has a deal in place to sell ProFlowers, along with the rest of its North America and Latin America consumer and florist businesses, to an affiliate of private equity firm Nexus Capital for $95 million.
Additionally, FTD sold its UK-based Interflora business, which is not part of the Chapter 11 filing, to a subsidiary of The Wonderful Co. for $59.5 million.
FTD also has signed letters of intent for the sale of two of its other e-Commerce businesses:
- Personal Creations to an unnamed strategic investor; and
- Shari’s Berries to Edible Arrangements founder Tariq Farid.
These two sales will still require the bankruptcy court’s approval.
The company has lined up $94.5 million in financing from its lenders to maintain operations, and plans to accept auction bids for approximately the next six weeks as it tries to pay off more than $200 million in bank loans and supplier bills, court papers say. FTD took on that debt when it acquired Provide Commerce, the parent company of ProFlowers, Shari’s Berries and Personal Creations, for $430 million.
At the time of the deal, ProFlowers directly sourced its flowers, allowing it to offer a wider variety of floral and gift products for lower prices. However, the company failed to unify the businesses, particularly in consolidating technological investments and combining marketing teams. Despite bringing in an established e-Commerce player, FTD continued to struggle in a market that includes 1-800-Flowers.com, Teleflora, Bouqs and Amazon,with sales in its florist business falling 1% in 2016, 9% in 2017 and 9% again in 2018. Net loss in 2018 totaled $224.7 million.
The flower delivery retailer saw the writing on the wall last summer when its board initiated a review of strategic alternatives as well as a corporate restructuring and cost-savings plan. In March 2019, FTD noted in its annual filing that it needed to find a buyer or raise the money to pay down its $217.7 million in debt by June 1 to satisfy recent terms it set with creditors, or it risked going out of business. The debt itself has to be paid off by Sept. 19.
Last month, FTD announced that it did not file its Q1 earnings report in time, which prompted NASDAQ to notify the company on May 17 that it had 60 calendar days to submit a plan to regain listing compliance. FTD initially expected to file its Form 10-Q to regain compliance within the 60-day period, but now expects to be delisted after the Chapter 11 filing.