Leslie's Files Chapter 11, Nasdaq to Delist Its Stock

What happened

Leslie's, Inc., a Phoenix-based retailer of swimming pool and spa supplies and equipment, and nine of its subsidiaries filed voluntary petitions for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of Texas on September 30, 2026, according to a Form 8-K the company filed on October 5, 2026. The company reported annual revenue of about $1.24 billion for the fiscal year ended October 4, 2025.

The filing describes a pre-arranged reorganization: before filing, Leslie's signed a restructuring support agreement with certain lenders under its existing term loan, agreeing to a chapter 11 plan of reorganization. The filing does not state what caused the company's financial distress.

On October 2, 2026, after receiving interim approval from the bankruptcy court the day before, Leslie's entered into two new credit agreements to fund itself during the bankruptcy. The first is a $90 million term loan facility, of which the company drew $45 million on October 2. The second is a $225 million asset-based revolving credit facility, on which it drew nothing as of October 2.

Separately, on October 5, 2026, Nasdaq notified Leslie's that it would delist the company's common stock because of the bankruptcy filings. That notice followed an earlier one, dated September 25, 2026, saying the stock had closed below $1.00 per share for 30 consecutive business days. Nasdaq will suspend trading at the open on October 6, 2026. Leslie's did not request a hearing to appeal.

The stock closed at $0.102 on the event date, down 30.14% from the prior close of $0.146.

The financing

The two new facilities are debtor-in-possession loans, or DIP loans. In a chapter 11 case, a company usually cannot pay its older debts, so it borrows new money under court supervision to keep operating. DIP lenders are repaid ahead of nearly everyone else, which is why the filing calls the facilities "super-priority."

The $90 million term loan is split into two $45 million draws. The first was available once the court entered an interim order, which happened October 1, and Leslie's borrowed it on October 2. The second $45 million becomes available only if the court enters a final order.

The facilities are secured by essentially all of the company's assets, divided into two pools that mirror the existing lender arrangements: the asset-based facility has first claim on one pool, the term facility has first claim on the other, and each holds a junior claim on the other's pool.

The term loan bears interest at SOFR plus 6.50% per year; the asset-based loan at SOFR plus 3.25%. SOFR is a benchmark short-term interest rate, so the coupon moves with it. Both facilities mature six months after October 2, 2026, though they can mature earlier if the reorganization plan takes effect. Each term lender also earns an upfront premium equal to 9.50% of what it funded, paid in the form of additional term loans rather than cash.

The filing states that proceeds will pay costs and expenses of the bankruptcy case and fund working capital. It also discloses that about $50 million of revolving loans and $11.145 million of letters of credit were still outstanding under the company's prior asset-based credit agreement, and that those loans roll into the new asset-based facility dollar-for-dollar as the new facility is drawn. A letter of credit is a bank's promise to pay a third party if the company does not.

The delisting

Nasdaq cited Listing Rules 5101, 5110(b) and IM-5101-1, which let the exchange delist a company whose financial condition or bankruptcy filing raises concerns about its ability to continue operating. The earlier September 25 notice was based on a different rule, 5450(a)(1), the $1.00 minimum bid price.

Leslie's said it expects its stock to begin trading over the counter, on a market run by OTC Markets Group, once it leaves Nasdaq. The company added that it cannot assure that trading will begin or continue there, that brokers will keep quoting the stock, or that trading volume will be enough for an orderly market.

The company also warned that trading its securities during the bankruptcy is "highly speculative," that prices may have little relationship to what security holders actually recover, and that equity holders may experience a significant loss if the plan is confirmed.

What this means

A Form 8-K is the report a US public company files when something material happens between quarterly reports. Companies do not choose its contents freely: the SEC defines a list of numbered items, and the company checks off the ones that apply. Leslie's checked five here, and the list itself is a summary of the story. Item 1.01 covers a material definitive agreement, meaning a contract important enough that investors need to know. Item 1.03 covers bankruptcy or receivership. Item 2.03 covers the creation of a direct financial obligation, such as taking out new debt. Item 3.01 covers a delisting notice or failure to meet a listing rule. Item 9.01 covers the attached exhibits, in this case the two new credit agreements.

Under US bankruptcy law, a chapter 11 filing gives a company protection from creditors while it proposes a plan to reorganize its debts. Here the plan was negotiated before the filing, which is why the filing calls it "pre-arranged" and why the term lenders had already signed a restructuring support agreement. A plan still requires bankruptcy court confirmation before it takes effect.

A Form 25 is the mechanism for removing a security from an exchange listing. Either the company or the exchange can file one; here Nasdaq has said it will file. That is distinct from the delisting question raised by a Form 25 filed for debt securities nearing maturity, which is routine repayment rather than a company leaving an exchange. This notice concerns Leslie's common stock, which is a different matter.

What happens next is largely set by the court schedule rather than by the market. Leslie's needs a final order from the bankruptcy court to draw the second $45 million of its term loan. It needs the court to confirm the plan for the reorganization to take effect. Nasdaq will suspend trading October 6 regardless. The filing says the company expects to move to an over-the-counter market, but it does not say when, and it explicitly declines to promise that trading there will work.