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November 16, 2020 – The Debtors filed a motion to extend the periods during which they have an exclusive right to file a Plan and solicit acceptances thereof, through and including February 15, 2021 and April 19, 2021, respectively [Docket No. 1017]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on November 16, 2020 and January 18, 2021, respectively.
This is the Debtors' fourth exclusivity extension request. The motion provides, "The Debtors’ filing of a plan is contingent on, among other things, the analysis of claims filed, the outcome of the sale of the Remaining Assets, the reconciliation of the Royalty Escrow and the TSA winddown. The outcome of these contingencies will have a significant impact on the terms of a plan and the cash available to satisfy allowed claims and interests.
While the Debtors’ primary focus has been on marketing and monetizing the Remaining Assets, the Debtors fully appreciate that the proceeds of the Sale and any sale of the Remaining Assets may need to be distributed pursuant to a plan and are desirous of doing so as quickly as feasible.
It is difficult to formulate and negotiate a plan until potential transaction proceeds and claims asserted against the Debtors’ estates are known. Without this basic economic information, parties-in-interest cannot fully appreciate what the terms of a consensual plan should be. However, as mentioned above, this information will be known in short order – the Debtors are working to monetize the Remaining Assets and resolving discrepancies regarding the Royalty Escrow. Additionally, the Debtors have reconciled the 503(b)(9) claims asserted against the Debtors’ estates and are in the process of reconciling other administrative and priority claims, which will inform the structure of a plan."
Efforts, however, have been hampered by COVID-19. The motion continues: "As set forth in the First Day Declaration, the Debtors operated hundreds of retail stores throughout the United States and via an e-commerce platform. Although the retail locations closed, the Debtors continued to operate pursuant to the terms of the TSA, which remained in effect until June 30, 2020 and are currently in the process of winding down the TSA. The Debtors also continue to negotiate with the Purchase and Agent regarding the Royalty Escrow, which could result in additional funds to the Debtors’ estates. The Debtors are seeking to monetize the Remaining Assets to maximize value to creditors. Given the many moving parts—particularly in the current pandemic environment—the complexity of these Chapter 11 Cases is apparent.
The complexity of concurrently coordinating with the Purchaser with respect to the TSA, undertaking a marketing process for a sale for the Debtors’ Remaining Assets and planning an orderly wind-down for the Debtors’ estates that would maximize value for creditors has required a significant amount of time and energy from the Debtors and their advisors. Further, largely due to the current pandemic, these processes are not yet complete."
A hearing to consider the motion has yet to be scheduled, while the objection date has been set for November 30, 2020.
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