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GNC Holdings Inc. filed for chapter 11 bankruptcy protection Tuesday with plans to sell itself and close up to a sixth of its 7,300 stores world-wide.
The vitamin-and-supplement seller GNC, -26.17% blamed the filing on plummeting sales due to the coronavirus pandemic, supplier demands for faster payments, interest coming due soon on bond debt and the drag on earnings from underperforming stores. Without bankruptcy financing, GNC will run out of cash to run its business by the end of June, court papers say.
Bankruptcy financiers have given GNC about six months to either achieve a sale, possibly to one of China’s largest drugmakers, Harbin Pharmaceutical Group Co., or reorganize with a lighter balance sheet, according to papers filed in U.S. Bankruptcy Court in Wilmington, Del.
The Pittsburgh-based retailer said it reached an agreement with the bulk of its secured lenders to pursue a dual-path restructuring that will preserve the business. A proposed sale to an affiliate of Harbin, GNC’s largest shareholder, has support from a majority of secured lenders, according to the company. But, unless an auction drives up Harbin’s $760 million offer, a sale won’t cover GNC’s $903 million in bank and bond debt.
An expanded version of this report appears at WSJ.com.
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