December 15, 2020 – The Debtors filed a notice which attached (i) an amendment to the Debtors' November 4th asset purchase agreement (the “APA”) with stalking horse American Freight FFO, LLC (the “Purchaser”) and (ii) a transition services agreement (the "TSA") between the Debtors and the Purchaser [Docket No. 178, with the APA amendment attached as Exhibit A and the TSA at Exhibit B].

The APA was filed initially filed with the Debtors' sale motion [Docket No. 16].

The APA amendments, executed prior to the Debtors' entry into debtor-in-possession ("DIP") financing arrangements with the Purchaser, reflect the terms of that financing, notably the provision of $739k of wind-down funding (escrowed for the time being) within the DIP. That amount, therefore, is no longer to be included separately in the definition of "Purchase Price," given that it is already part of the DIP obligations ($6.84mn) which the Purchaser is credit bidding. 

As amended, Section 2.5 now reads in relevant part: "Consideration. As consideration for the sale and transfer of the Purchased Assets, Buyer shall, in addition to the assumption by Buyer of the Assumed Liabilities, (i) credit bid a portion of the Secured Debt in an amount of $7,000,000 pursuant to section 363(k) of the Bankruptcy Code, and (ii) credit bid the amount of all outstanding obligations under the DIP Agreement as of the Closing Date (including, without limitation, the Wind Down Cash) pursuant to section 363(k) of the Bankruptcy Code", with "Wind Down Cash" now defined as “an amount of cash equal to $739,000 to fund the wind-down of the Sellers' estates and the closure of the Chapter 11 Cases, which such amount was funded to Sellers under the terms of the DIP Agreement.”

Additionally, the amendment changes proposed bidder protections, providing: "Section 8.3 of the Asset Purchase Agreement is amended by replacing 'the greater of (i) $360,000 or (ii) three percent (3.0%) of the Purchase Price' with “two percent (2.0%) of the Purchase Price” and replacing the amount of '$400,000' with '$200,000.'”

Key Terms of the APA, as amended:

• Sellers: Furniture Factory Ultimate Holding, LP
• Purchaser: American Freight FFO, LLC
• Purchase Price: (other than Assumed Liabilities and Cure Costs): Consists of (i) credit bid a portion of the Secured Debt in an amount of $7,000,000 pursuant to section 363(k) of the Bankruptcy Code, and (ii) credit bid the amount of all outstanding obligations under the DIP Agreement as of the Closing Date (including, without limitation, the Wind Down Cash) pursuant to section 363(k) of the Bankruptcy Code.
• Breakup Fee and Expense Reimbursement: Upon the date Sellers consummate an Alternate Transaction, Sellers shall immediately pay to Buyer a breakup fee equal to two percent (2.0%) of the Purchase Price (exclusive of the value of the Assumed Liabilities) (the “Breakup Fee”), and an expense reimbursement of actual, necessary and documented out-of-pocket expenses associated with this Agreement in an amount not to exceed $200,000 (the “Expense Reimbursement”).

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