Coldwater Creek Inc. has adjusted its chapter 11 payout plan but still faces a fight with unsecured creditors over its offer to give them seven cents to nine cents for each dollar they are owed, Dow Jones Daily Bankruptcy Review reported today. Coldwater Creek's lawyers filed a revised chapter 11 plan on Friday reflecting better-than-expected results from the women's clothing retailer's bankruptcy auction and asked for an Aug. 7 confirmation hearing to lock the plan in place.
RadioShack Corp. said its fiscal first-quarter loss widened as the struggling retailer continued to burn through cash and suffer a decline in consumer electronics demand, the Wall Street Journal reported today. Shares fell 16 percent to $1.30 in recent premarket trading as the company's results were worse than analysts had projected, same-store sales plunged 14 percent and customer traffic flagged. "Overall, our first-quarter performance was challenged by an industry-wide decline in consumer electronics and a soft mobility market which impacted traffic trends throughout the quarter," Chief Executive Joseph Magnacca said, specifically citing weakness in its mobile-phone business. If results don't improve, the company said it would be required to borrow more under its 2018 credit agreement, make additional cuts in spending and reduce its operating costs, including in employee headcount, according to a filing with the U.S. Securities and Exchange Commission. RadioShack had sought to shut down 1,100 of its 4,300 stores, but some of the company's lenders challenged the move. Under credit agreements, RadioShack can't close more than 200 stores this year without the approval of certain lenders.
A Chinese consortium that won an auction to buy Brookstone Holdings Corp. out of bankruptcy plans to keep nearly all of the specialty retailer's 240 stores open despite earlier indications that it could close as many as 25 locations, an attorney for Brookstone told a bankruptcy judge on Friday, the Wall Street Journal reported on Saturday. Sailing Innovation US Inc. — a collaboration between Chinese investment firm Sailing Capital Overseas Investment Fund LP and Chinese conglomerate Sanpower Group, with a financing commitment from GE Capital — emerged as the winner for Brookstone at a June 2 auction with a bid valued at about $174 million. The deal includes $137.5 million in cash, $10 million in second-lien notes, and the assumption of about $28 million in liabilities, K&L Gates LLP partner Charles Dale said on Friday during a hearing before Bankruptcy Judge Brendan Shannon.
The Sbarro pizza chain is officially out of bankruptcy after entering into a plan that allowed lenders to swap $148 million in debt for control of the reorganized business, the Wall Street Journal reported today. The Long Island, N.Y.-based company, which has more than 800 restaurants around the world, was poised to get new owners under the plan, including distressed-debt investors Apollo Global Management, Babson Capital Management LLC and Guggenheim Investment Management LLC. The plan took effect on Monday, according to documents filed in U.S. Bankruptcy Court in Manhattan. Sbarro put its restaurants, which anchor many mall food courts, into chapter 11 protection on March 10, blaming its financial troubles on an "unprecedented decline in mall traffic" that made it difficult to repay its debt. Sbarro closed roughly 180 of its 400 restaurants in North America before filing for bankruptcy, enabling it to save roughly $82 million a year, according to court filings.
Coldwater Creek Inc. received a bankruptcy judge's approval Monday to pay executives up to $1.7 million in bonuses and lower-level employees as much as $800,000 in extra pay as a reward for helping liquidate the women's clothing retailer, Dow Jones Daily Bankruptcy Review reported today. The company initially proposed paying $3.6 million to four executives and an additional $1.1 million to 28 employees but scaled back the bonus plans after receiving objections from creditors and a U.S. Justice Department official.
Coldwater Creek’s creditors are at a loss to understand why sales boomed in the wake of its bankruptcy filing, but it’s not a mystery to the former retailer’s target customers, the Wall Street Journal reported on Saturday. Coldwater Creek launched in the Midwest some 30 years ago and catered to mature, educated women. The line caught on among a crowd of people, including professional women, who didn’t have the time or patience to go from store to store to find comfortable classics. When Coldwater Creek shoppers found out the company was going under, they stocked up, according to Massachusetts attorney Alanna Cline, who identified herself as “a very satisfied and needy customer — notwithstanding the decline in quality and design over the past couple of years.” The prospect of saving a couple more bucks at going-out-of-business sales wasn’t worth the risk that favorite items would be sold out, it seems. “Fear and need” drove a run on the Coldwater Creek website, according to Cline.
Creditors have raised questions about what happened in the final days before Coldwater Creek handed over the keys to its 330-store chain to liquidators in bankruptcy, the Wall Street Journal reported today. Something fueled an unexpected sales boom in the weeks between the April bankruptcy filing and the liquidator takeover in early May. It may be that the retailer's mature and affluent female shoppers flocked to the stores in search of post-bankruptcy bargains, bringing in more cash than Coldwater Creek expected. Or it may be, as creditors suspect, that the company's sales projections were tailored to justify bankruptcy financing that, as it turned out, wasn't needed. "It is not hyperbole to say that [Coldwater Creek] 'gave away the store,' with no legitimate business justification for doing so," creditors' lawyers said in bankruptcy court papers. That is a point the company and lender dispute as Coldwater Creek enters the last stages of its bankruptcy liquidation, which will culminate in confirmation of a chapter 11 plan that establishes the mechanism to pay creditors.
Brookstone Holdings Corp.'s creditors can begin voting on a bankruptcy-exit plan that relies on the sale of the specialty retailer at an upcoming auction, Dow Jones Daily Bankruptcy Review reported today. The voting follows the Monday approval of Brookstone's disclosure statement by Bankruptcy Judge Brendan Shannon. Brookstone filed for chapter 11 protection in early April with a $146.3 million offer from an affiliate of Spencer Spirit Holdings Inc.
Sbarro Inc., the pizza chain often found in shopping mall food courts, received a U.S. bankruptcy judge's approval yesterday to move forward with a restructuring plan that will allow it to end its second bankruptcy in three years, Reuters reported yesterday. Bankruptcy Judge Martin Glenn signed an order approving a plan by Sbarro to cut its $148 million debt load by more than 85 percent, to about $20 million. Founded in 1956, the Melville, N.Y.-based Sbarro had tried to boost sales by revamping recipes to entice diners who increasingly favor "fast casual" chains such as Chipotle Mexican Grill Inc. and Panera Bread Co. But an "unprecedented decline in mall traffic" and an "unsustainable" balance sheet necessitated a restructuring, including the closure of hundreds of restaurants, the company said in court papers when it filed for bankruptcy in March. Sbarro entered chapter 11 with a pre-packaged restructuring plan that already had the backing of many of its creditors. In a parallel restructuring option, it also explored auctioning its assets but, drawing no bidders, went ahead with the prepackaged restructuring.
Coldwater Creek Inc.’s unsecured creditors are opposing the liquidating retailer’s proposed plan to exit bankruptcy, arguing that serious revisions need to be made to ensure that creditors recover as much money as possible in the case, the Wall Street Journal reported today. In a court filing on Wednesday, a committee of unsecured creditors asked a judge to slow down the rushed timeline of the five-week-old case “before significant estate resources are needlessly wasted.” If given more time, the committee says that it will work with Coldwater on a new creditor-repayment plan, one that allows creditors to pursue litigation against the company’s former officers and lenders and that gives the committee more control over the liquidation process.
