Orchard Supply Hardware Stores (OSH) said Wednesday that the U.S. Bankruptcy Court for the District of Delaware has approved all of the First Day Motions related to its voluntary Chapter 11 process initiated recently.
The company said the motions collectively will enable it to continue operating its business as usual as it completes its Chapter 11 case.
Among the approved motions, the Court granted Orchard access to $177 million in debtor in-possession financing from Wells Fargo Bank, the company's existing ABL lender, and its Term Loan Lenders. This financing, in addition to Orchard's ongoing cash flow, will ensure the Company is able to continue meeting its financial obligations throughout the Chapter 11 case.
The Court also approved motions giving Orchard authority to, among other things, pay employee wages and benefits throughout the Chapter 11 process.
Additionally, Orchard was granted approval to accept bids from companies to manage store closing sales for an initial eight stores, with potential additional stores to be determined as the Chapter 11 process continues.
"The motions approved today will help ensure we continue to operate our business as usual and uphold our commitments to all of our stakeholders while we work to achieve our financial objectives," said Mark Baker, Chief Executive Officer.
Orchard announced June 17 that it has reached an agreement through which Lowe's Companies Inc. will acquire the majority of its assets for $205 million in cash, plus the assumption of payables owed to nearly all of Orchard's supplier partners. To facilitate the sale and restructure its balance sheet, Orchard filed voluntary Chapter 11 petitions in the United States Bankruptcy Court for the District of Delaware. The agreement with Lowe's comprises the initial stalking horse bid in the Court-supervised auction process under Section 363 of the Bankruptcy Code.
Under the terms of the agreement, Orchard will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates. The company also will benefit from the financial stability of its new corporate parent which, combined with the benefits of its balance sheet restructuring, will allow Orchard to continue its repositioning and growth strategy.
Orchard is advised in this financial restructuring by Moelis & Co., FTI Consulting, and DLA Piper.
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