Liquidating discount retailer Daffy's Inc. says it needs to immediately tap a fresh $12 million loan in order to complete the sale of its real estate assets and repay its creditors, Dow Jones Daily Bankruptcy Review Small Cap reported yesterday. The company, which once operated 19 stores in New York, New Jersey and Pennsylvania, says it is running out of money to pay its expenses and stay in line with its existing loans. Lacking "sufficient liquid funds," it is seeking court permission to access a new bankruptcy loan from Jericho Acquisitions I LLC, an affiliate of Manhattan-based developer JEMB Realty Corp. and the purchaser of Daffy's real estate assets under a deal negotiated before its August bankruptcy filing. A judge previously cleared Daffy's to tap a $10 million bankruptcy loan from Wells Fargo; that loan and others from the bank are set to mature Dec. 24. The deal with Jericho includes a cash payment of up to $46 million for Daffy's in exchange for certain of its store leases and intellectual property, according to court papers. A judge is set to consider Daffy's financing request at a hearing Dec. 17. Daffy's sought chapter 11 protection on Aug. 1.
