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January 13, 2021 – Christopher & Banks Corporation and two affiliated Debtors (OTCQX: CBKC; “CB” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of New Jersey, lead case number 21-10269. The Debtors, "a national specialty retailer featuring exclusively designed, privately-branded women’s apparel and accessories at a good value" (449 stores), are represented by Michael D. Sirota of Cole Schotz P.C. Further board-authorized engagements include (i) Dorsey & Whitney LLP as general bankruptcy counsel, (ii) Berkeley Research Group, LLC as financial advisors, (iii) B. Riley Securities, Inc. as investment banker, (iv) Hilco Merchant Resources LLP as liquidator and (v) Omni Agent Solutions as claims agent.
At filing, the Debtors note between 5,000 and 10,000 creditors; estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $50.0mn and $100.0mn. In their most recent 10-Q, the Debtors (ie, topco Christopher & Banks Corporation) noted assets of $172.8mn and liabilities of $206.4mn (this including $89.0mn of long-term leases) on a consolidated basis. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Cache Valley Bank ($10.0mn PPP Loan claim), (ii) Kostrama/Jiaxing Mengi I.E. Co, ($2.6mn trade claim) and (iii) Presslink Limited ($2.4mn trade claim).
Events Leading to the Chapter 11 Filing
In a declaration in support of the Chapter 11 filing (the “Jones Declaration”), Keri L Jones, the Debtors’ President and Chief Executive Officer, detailed the events leading to CB's Chapter 11 filing. The Jones Declaration provides: “The Debtors are the latest victims of the retail apocalypse that was first created by a customer migration away from brick-and-mortar stores and most recently, the COVID-19 pandemic. The COVID-19 pandemic was the proverbial “nail in the coffin” for the Debtors following years of adverse market trends, including the shifting of sales from traditional brick-and-mortar retailers to online sellers, increased competition from big-box retailers, and changing consumer preferences.
In the months leading to the Petition Date, the Debtors took steps to increase liquidity by negotiating lease concessions and deferrals and reducing operating and capital expenditures. Additionally, the Debtors explored sources of additional financing through a refinancing of the Debtors’ debt and a private restructuring of their debt and liabilities. Unfortunately, given the Debtors’ continued operating losses, decline in sales and the limited runway, the Debtors were unable to execute on any out-of-court solution for their liquidity constraints.
In a volatile retail climate that has seen numerous casualties since the COVID-19 outbreak, the Debtors commenced these Chapter 11 Cases to preserve value for the benefit of the Debtors’ stakeholders. The Debtors determined that filing for Chapter 11 protection, utilizing cash collateral (with the consent of their lenders) and pursuing an orderly liquidation of their assets in a controlled, court-supervised environment is the best available option to maximize value for the benefit of all stakeholders.”
Store Closings and Sale of E-Commerce Assets
The Jones Declaration provides: "Based on market feedback, the Debtors, in consultation with their advisors, have determined that a sale of any traditional brick-and-mortar business is not viable or achievable under the current circumstances. The sale of the Debtors’ eCommerce business, however, has and continues to represent an attractive asset for buyers. Accordingly, the Debtors plan to pursue 'going out of business' ('GOB') sales for their store fleet. To that end, before the Petition Date, the Debtors engaged Hilco Merchant Resources, LLC ('Hilco') to liquidate the inventory in their 449 retail stores. While the Debtors are liquidating their inventory, the Debtors, with the assistance of B. Riley, plan to continue to market and ultimately sell the eCommerce business under Section 363 of the Bankruptcy Code. The Debtors believe and respectfully submit that a dual track process – – that is, an orderly liquidation of their store inventory through GOB sales [over 45 days] and a going concern sale of the eCommerce business to the Stalking Horse Bidder (or successful bidder) – – maximizes the value of the Debtors’ assets and the recovery to creditors."
Significant Shareholders (for Cleveland Capital sourced from most recent Schedule 14A and for Macellum, a Schedule 13D)
- Macellum Retail Opportunity Fund, LP: 12.5%
- Cleveland Capital, L.P. : 6.1%
About the Debtors
According to the Debtors: “Christopher & Banks Corporation is a Minneapolis-based company that specializes in women’s apparel and accessories. Founded in 1956 when Gil Braun opened his first Braun’s store in Minneapolis, Minnesota, Brauns Fashions became publicly traded in 1992 and rebranded to Christopher & Banks Corporation in 2000.
We are a value-priced retailer of women’s specialty apparel that caters to women of all sizes from petite to missy to women’s (plus). We offer modern and comfortable clothes from the basics to unique colors, details and prints, which are specially designed for our proprietary Christopher & Banks line. What makes us unique is the quality, fit and service we offer, particularly as it relates to designing outfits. Our motto is Effortless Style for Real Life.
Our nearly 450 stores are located throughout the country primarily in smaller markets with populations less than 75,000. Not only are our retail and outlet stores highly accessible to our core customers, but they are also bright and inviting and feature stylists who assist in making each customer’s shopping experience enjoyable through genuine and customized wardrobe outfitting. In addition, for our customer’s convenience, our growing e-commerce business offers an expanded assortment of sizes, lengths, and colors.
Corporate Structure Chart
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