Chapter 11 Restructuring
Pool and spa retailer Leslie's files for Chapter 11 bankruptcy to eliminate debt.
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Key Points
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Leslie’s reported a sharp deterioration in results in the year to August 2026: sales fell to $1.02 billion from $1.11 billion, gross profit declined to $326.6 million from $392.1 million, and EBITDA dropped to $10.3 million from $55.0 million.
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In its bankruptcy filing, Leslie’s listed assets of between $500 million and $1 billion and liabilities of between $1 billion and $10 billion.
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Leslie’s said first-day court motions would seek permission to continue paying wages and benefits, maintain customer programs, and preserve access to other routine Chapter 11 relief.
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The filing followed Leslie’s disclosure in August of substantial doubt about its ability to continue as a going concern, according to Pool Magazine.
Leslie's, a major U.S. pool and spa retailer, filed for Chapter 11 bankruptcy in Texas with a lender-backed plan to slash $685 million—roughly 90%—of its debt. San Luis Obispo reported the company will close 76 stores nationwide as part of the restructuring, with California hit hardest at 26 locations. The company expects to emerge from bankruptcy in early 2027 while continuing normal operations during the process.
Leslie's financial condition deteriorated sharply. Year-to-August 2026 sales dropped to $1.02 billion from $1.11 billion, while EBITDA plummeted to $10.3 million from $55.0 million. Desert Sun noted that more than 80% of existing lenders back the restructuring plan and will gain majority ownership post-emergence. The filing includes $90 million in new financing to keep operations running.
A Retailer Under Intense Financial Pressure
Leslie's faced a cliff in recent months. Gross profit collapsed to $326.6 million from $392.1 million year-over-year, signaling eroding margins across the business. The Californian reported the company is one of the nation's largest sellers of pool chemicals and maintenance equipment. The deterioration forced Leslie's to disclose in August that it had substantial doubt about remaining a going concern.
How the Chapter 11 Plan Works
The restructuring is heavily pre-negotiated with creditors. Lenders will inject $90 million in debtor-in-possession financing—cash needed to operate during bankruptcy. An additional $60 million in equity financing and a separate $225 million asset-based loan round out the capital stack. Merced Sun Star noted this arrangement gives existing lenders control when Leslie's exits bankruptcy, likely protecting them from a total loss.
Store Closures and Continued Operations
Leslie's will shutter 76 locations nationwide while keeping the majority of its footprint open. San Luis Obispo reported 26 California stores will close, making California the most affected state. The company filed first-day motions seeking court approval to continue paying employee wages, maintain customer loyalty programs, and access routine bankruptcy relief. Normal shopping and pool service should continue uninterrupted at remaining locations.
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