Pedestrians pass a GNC store at the company's world headquarters in downtown Pittsburgh on April 29, 2020.The Associated Press
GNC Holdings Inc., the vitamin and herbal supplement retailer, has filed for bankruptcy, with plans to close at least 800 to 1,200 locations and possibly sell itself.
The 85-year-old company filed for Chapter 11 protection late Tuesday night in the U.S. bankruptcy court in Wilmington, Del.
GNC had been trying to reduce its nearly US$900-million debt load amid falling sales at its bricks-and-mortar stores when the novel coronavirus pandemic forced thousands of locations to close temporarily, cutting off a major revenue source. About 2,100 of its 11,000 employees remain furloughed.
The Pittsburgh-based company, whose name is an acronym for General Nutrition Centers, plans a “dual-path” restructuring where it would either be sold as a going concern, or improve its balance sheet by shedding more than US$300-million of debt.
GNC said it has agreed in principle with many lenders to sell itself to an affiliate of its largest shareholder, Harbin Pharmaceutical Group Co., for US$760-million in a court-supervised auction, subject to higher bids.
It also said it has lined up US$130-million in new financing, including support from Harbin and International Vitamin Corp, its largest vendor.
Chief financial officer Tricia Tolivar said GNC and 16 affiliates sought court protection with a goal of “operationally realigning their businesses,” while minimizing the impact on customers, employees, landlords and vendors.
Business operations will continue, and fewer than 500 stores remain closed because of the pandemic. The company hopes to emerge from Chapter 11 in the fall.
GNC has about 7,300 locations, including 5,200 in the United States and 1,600 “store-within-a-store” locations in Rite Aid stores. The rest are in about 50 other countries. Roughly 2,633 U.S. and Canadian stores are company-owned.
The company lost US$200.1-million in the first quarter, in part because of the forced closings. It had shuttered 596 underperforming stores from January, 2018, to March, 2020.
The case is In re GNC Holdings Inc, U.S. Bankruptcy Court, District of Delaware, No. 20-bk-11662.
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