Off-price home decor retailer Tuesday Morning planned to give back hundreds of store keys to landlords, offloading more than half of its stores, as it works through Chapter 11 bankruptcy in hopes of finding a profitable path forward.

In exiting its unprofitable stores by March 31, the Dallas-based retailer was able to auction off about 30 retail leases of its 264 proposed closing stores spanning 38 states with the help of A&G Real Estate Partners. With limited new retail construction in recent years, an A&G executive told CoStar News the firm was seeing early strong interest in properties in Florida, Arizona and Texas.

That interest turned into strong bids for the auctioned off leases, with about $1.6 million of deals being reached a day earlier, an attorney told the judge overseeing the Tuesday Morning bankruptcy in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth division. By auctioning off the leases, the attorney told the court during a hearing the deal was expected to have a net benefit of $600,000 to $700,000 to the estate.

Tuesday Morning CEO Andrew Berger told the court the retailer will vacate the hundreds of U.S. stores that were rejected because they were burdensome to the estate — including those that sold at auction — before midnight and the start of a new month, surrendering keys and possessions to landlords with the help of onsite lock boxes.

"Following the [going out of business] sales, the debtors will no longer have any continuing use or need for the premises," Berger said, in a declaration to the court. "The debtors have determined, in their business judgment, that the leases are burdensome and provide no economic value to the estates. The leases are unnecessary to the debtors’ go-forward business operations and, if not rejected, may hinder the Debtors’ reorganization efforts. Rejection of the leases will greatly reduce one of the debtors’ largest expense categories."

Judge Edward Lee Morris verbally agreed to the rejection of the leases late Thursday afternoon, signing an order on Friday with language inserted to protect the rights of landlords voiced by multiple landlord attorneys during Thursday's hearing.

Landlord attorneys told the judge they were concerned about what materials might be abandoned by the retailer upon exiting the stores and wanted to protect the rights of various landlords to seek remedies if the property was damaged or the process didn't go as outlined in the court order.

Tuesday Morning was in a hurry to exit those unprofitable stores, seeking to finalize the court-approved order Friday just ahead of the end of the month to ensure the retailer wouldn't be on the hook for April rent at hundreds of its closing stores.

The retailer's struggling financial situation was one of the big drivers behind its filing for Chapter 11 bankruptcy for the second time in three years.

This second go-around in bankruptcy has been "chaotic and highly litigious," the judge characterized in a hearing earlier this month, with a court-ordered mediation underway between two rival debtor-in-possession lenders — Invictus Global Management and an affiliate of Gordon Brothers — in hopes to coming to an agreement between the two parties.

Attorneys for the two lenders told the judge the mediation has been productive, however, an attorney for the committee of unsecured creditors told Morris the mediation between the two debtor-in-possession lenders had a "lack of urgency," that was "concerning," with "everyone focused on deal points," rather than reaching a resolution. The mediation is expected to continue into next week.

In all, 30 store leases were sold at auction spanning 19 states. The leases are located at the following retail properties:

Alabama: 1620 Montclair Road in Irondale.

Arkansas: 2008 S. Caraway Road in Jonesboro.

Arizona: 245 E. Bell Road in Phoenix.

California: 18040 Chatsworth St. in Granada Hills; 3250 Dale Road in Modesto; 1355 N. McDowell Blvd. in Petaluma.

Colorado: 5637 Barnes Road in Colorado Springs.

Florida: 2661 S. Woodland Blvd. in Deland; 745 Courtenay Parkway in Merritt Island; 2420 Washington Ave. in Titusville; 1377 Wendy Court in Spring Hill.

Georgia: 191 Alps Road in Athens; 13069 Hwy. 9N in Milton.

Iowa: 902 W. Kimberly Road in Davenport.

Indiana: 2548 Miracle Lane in Mishawaka.

Kentucky: 1915 S. Hurstbourne Parkway in Louisville; 1555 East New Circle Road in Lexington.

Maryland: 9150 Baltimore National Pike in Ellicott City.

Michigan: 6140 South Westnedge Ave. in Portage; 905 East Big Beaver Road in Troy.

Mississippi: 195 Goodman Road W. in Southhaven.

North Carolina: 703 Greenville Blvd. SE in Greenville.

Ohio: 454 Ohio Pike in Cincinnati.

Oklahoma: 501 SE Washington Blvd. in Bartlesville.

South Carolina: 2529 Whiskey Road in Aiken; 975 Savannah Highway in Charleston.

Texas: 8072 Farm-to-Market Road 1960 in Humble; 6450 N. Desert Blvd. in El Paso; 7525 Westheimer Road in Houston.

Virginia: 2890 Prince William Parkway in Woodridge.