November 3, 2020 – The Debtors filed a motion to extend the periods during which the Company has an exclusive right to file a Plan and solicit acceptances thereof, through and including April 19, 2021 and June 18, 2021, respectively [Docket No. 1069]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on November 20, 2020 and January 19, 2021, respectively.

On the same day, a notice was filed with the Court announcing that the Plan confirmation hearing has been adjourned to November 17, 2020 from November 5th [Docket No. 1068]. The deadline for the Debtors to file (a) their brief in support of Confirmation and omnibus reply to objections thereto and (b) the report tabulating the voting on the Plan is November 13, 2020.

The extension motion explains, “In just over three months from the Petition Date, the Debtors have made substantial progress in these chapter 11 cases. The Debtors executed a smooth transition into chapter 11, secured commitments for and approval of $150 million in New Term Loan Financing (initially approved as a debtor-in-possession financing) and a $400 million debtor-in-possession ABL financing facility, completed a sale of the Catherines brand and executed a stalking horse purchase agreement related to the sale of the Justice brand, secured approval of a disclosure statement and completed solicitation of the Debtors’ chapter 11 Plan and garnered significant additional support for the restructuring transactions embodied in the Restructuring Support Agreement and the Plan, including increasing support among the Debtors’ secured term lenders to approximately 95 percent and striking a global deal with the official committee of unsecured creditors appointed in these chapter 11 cases (the ‘Creditors’ Committee’). The Debtors have also negotiated the terms of various resolutions and transactions with dozens of vendors, landlords and other contract and litigation counterparties. While the Debtors have made substantial progress and will continue to move efficiently through these chapter 11 cases, they require additional time to confirm and consummate a chapter 11 plan beyond the initial periods provided for in the Bankruptcy Code.

Separate from the Plan process, the Debtors and their advisors have conducted extensive marketing processes to ensure the restructuring transactions implemented in these chapter 11 cases maximize value for all stakeholders. To that end, the Debtors sold the Catherines brand after a bidding process and auction that resulted in an increase in the total base purchase price of the stalking horse bid for the Catherines assets from $16 million to the eventual purchase price of $40.8 million. The Debtors also are currently in the process of selling the Justice brand and have a stalking horse bid for a total base purchase price of $44 million in place, subject to higher or better offers and, if necessary, an auction.

This progress has all been against the backdrop of the global COVID-19 pandemic. Indeed, the pandemic, and the resulting economic downturn, were material factors in these chapter 11 filings, which accelerated the Debtors’ need to realize the benefits of its Strategic Plan. The pandemic has also placed a substantial logistical burden on almost every aspect of the Company’s chapter 11 cases, including the day-to-day operation of the Company’s business, as a substantial number of the Company’s management, employees and advisors continue to work remotely. In addition to the challenges posed by the COVID-19 pandemic, the Debtors face, and have been facing, the macro-trends that have crippled many apparel and retail companies in recent years, including the general downturn in the retail industry and the marked shift away from brick-and-mortar retail to online channels.

…the Debtors have used the initial period of these chapter 11 cases to transition their operations into chapter 11, secure additional financing to fund their operations, and engage with their stakeholders on key issues in preparation for chapter 11 plan negotiations, which ultimately resulted in the Debtors filing and solicitation of the Plan. The extension of the Exclusivity Periods will allow the Debtors to continue to progress these efforts toward a value-maximizing restructuring transaction.”

RSA and Plan

The motion further states, "On July 23, 2020, after several months of negotiations, the Debtors and 68 percent of the Term Loan Lenders (the 'Consenting Stakeholders') executed the Restructuring Support Agreement (such agreement, the 'Restructuring Support Agreement'). Since executing the Restructuring Support Agreement, the Debtors documented the terms of the prearranged restructuring contemplated thereby in the Plan and worked to build consensus with additional lenders. In fact, on September 9, 2020, the Debtors and the Consenting Stakeholders agreed to amend the Restructuring Support Agreement and additional Term Loan Lenders signed joinder agreements to become Consenting Stakeholders, increasing the support for the Restructuring Support Agreement to approximately 95% of the outstanding Term Loan Claims. The Debtors built even greater consensus around support for the Plan beyond those Consenting Stakeholders party to the Restructuring Support Agreement. On September 8, 2020, the Debtors agreed to a Global Settlement with the Creditors’ Committee with the support of the Consenting Stakeholders and the DIP Lenders, the terms of which were incorporated into an amended version of the Plan. As a result, each of the Debtors’ major creditor constituencies now supports the Plan."

According to the extension motion, on September 11, 2020, the Court entered an Order (I) Approving the Adequacy of the Disclosure Statement, (II) Approving the Solicitation and Notice Procedures With Respect to Confirmation of the Debtors’ Proposed Amended Joint Plan of Reorganization, (III) Approving the Forms of Ballots and Notices in Connection Therewith, (IV) Scheduling Certain Dates With Respect Thereto and (V) Granting Related Relief [Docket No. 592]. On September 16, 2020, the Debtors began solicitation of votes on the Amended Plan, which concluded on October 13, 2020. "If confirmed, the Plan will effectuate a comprehensive balance sheet restructuring that will deleverage the Debtors’ balance sheet by more than $1 billion."

About the Debtors

According to the Debtors: “ascena retail group, Inc. (Nasdaq: ASNA) is a national specialty retailer offering apparel, shoes, and accessories for women under the Premium Fashion segment (Ann Taylor, LOFT, and Lou & Grey), Plus Fashion segment (Lane Bryant, Catherines and Cacique) and for tween girls under the Kids Fashion segment (Justice). ascena retail group, Inc. through its retail brands operates ecommerce websites and approximately 2,800 stores throughout the United States, Canada, and Puerto Rico.”

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