Leslie's (LESL) Chapter 11: common stock cancelled, and $150 million of new money takes 90% of the company

Leslie's, Inc. (Nasdaq: LESL), the pool and spa supplies retailer, filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Southern District of Texas on Wednesday, September 30, 2026, under a restructuring support agreement that removes about $685 million of debt, which the company puts at 90% of its funded debt. The plan cancels the existing common stock with no recovery. After the headline crossed at 9:27 a.m. ET, LESL was 7.69% lower at one minute, at 0.1596, and then climbed to 17.53% above its 0.1729 reference price after ten minutes, at 0.2032.

What the restructuring support agreement does

More than 80% of Leslie's existing lenders signed the agreement before the filing. They are providing $90 million of new-money debtor-in-possession financing to run the business during the case, and some of them are backstopping a $60 million equity investment in the reorganized company. The debt being written down is mainly Leslie's term loan, which stood at $756.7 million on July 4, 2026 and was due in March 2028. Leslie's expects to leave bankruptcy in early 2027.

All stores stay open during the case apart from 76 that Leslie's is closing. Those closures follow 80 underperforming stores and a distribution center that management committed to shut in November 2025, and after both rounds the chain still operates more than 900 locations in 38 states.

Who owns Leslie's after the case

The 8-K that disclosed the filing warns of "the likelihood of the cancellation of the Company's common stock," and the plan term sheet gives existing shareholders nothing. Ownership of the reorganized company goes to the lenders and investors who put in new money, with a smaller slice for the old term loan.

A term loan of $756.7 million therefore converts into a 10% stake, while $150 million of new money takes the other 90%. Because the backstop parties are themselves term lenders, the split mostly decides which lenders put fresh cash into the business, and the old loan on its own recovers a small minority of the company.

How Leslie's got here

1. November 25, 2025: management commits to closing 80 underperforming stores and a distribution center.
2. August 12, 2026: fiscal third-quarter sales fall 8.4% to $458.5 million, comparable sales drop 6.2%, guidance is withdrawn and the company issues a going-concern warning.
3. September 30, 2026: the Chapter 11 filing, the restructuring support agreement and 76 more closures.
4. Early 2027: expected emergence from Chapter 11.

The third quarter showed net income of $47.8 million against $21.7 million a year earlier, but $17.5 million of it came from a settlement gain on card interchange fees, and adjusted EBITDA fell to $55.7 million from $81.6 million. Over the first nine months of the fiscal year the company lost $87.7 million.

The LESL reaction, measured

The headline crossed three minutes before the regular session opened. The candlestick chart shows LESL dipping in the first minute and climbing in the minutes after the open. Our reaction reading put the stock 17.53% above its reference ten minutes after the headline, at 0.2032, and the chart's last bar, 14 minutes after, closed at 0.1911, 10.53% above it. The first minute traded 700,132 shares and the first fifteen minutes 3,234,872. At about 17 cents a share, a one-cent change is close to 6% of the price, and under the plan those shares carry no claim on the reorganized company.