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November 15, 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 January 22, 2021 [Docket No. 1584]. Absent the requested relief, the Plan filing and solicitation periods are scheduled to expire on November 23, 2020.
On November 15, 2020, the Debtors filed a Second Amended Plan and Disclosure Statement [Docket Nos. 1577 and 1578, respectively] and the current extensions are intended to provide a bit of breathing room as the Debtors near Plan confirmation which is expected before year end. As currently scheduled, the Debtors have a November 16th hearing to consider the adequacy of the Disclosure Statement and a December 22nd Plan confirmation hearing. The Debtors sum up: "Through this Motion, the Debtors are requesting a brief extension to allow the Debtors to solicit acceptances of their Plan with a view to obtaining confirmation of the Plan before year’s end."
The Debtors’ extension motion explains, “Since filing their Chapter 11 Cases less than six months ago, the Debtors have reopened all of their stores, which had been closed due to the COVID 19 pandemic, paid down all but $100,000 of their prepetition secured debt, streamlined their operations by closing approximately 200 underperforming store locations and their Phoenix distribution center, funded all of their administrative expense obligations with free cash without the need to draw on either of their secured DIP facilities and proposed a plan that pays [general unsecured] creditors in full, with interest, and reinstates equity. Under the Debtors’ current proposed schedule, a hearing on the Debtors’ recently filed amended Disclosure Statement will be conducted on November 16, 2020, and a Plan confirmation hearing will be held on December 22, 2020. The Debtors’ current exclusivity period will end on November 23, 2020. Through this Motion, the Debtors are requesting a brief extension to allow the Debtors to solicit acceptances of their Plan with a view to obtaining confirmation of the Plan before year’s end.
The Debtors submit that cause exists for extending the Debtors’ Exclusivity Period in these Chapter 11 Cases because the additional time will enable the Debtors to finalize and implement their strategy for emergence from Chapter 11. The Debtors have already (i) rejected several burdensome executory contracts and unexpired real property leases, including store leases for unprofitable locations; (ii) made substantial progress, and have almost completed, negotiations with landlords regarding post-emergence lease concessions; (iii) maintained relationships with vendors that are key to successful post-emergence operations; and (iv) implemented numerous operational improvements, including initiatives relating to cost reduction, labor rationalization and improved inventory mix.
The monetary impact of the Debtors’ efforts to date will be substantial. The Debtors estimate that the aggregate go-forward annual savings that will result from store rent concessions, closure of the Phoenix Distribution Center and overhead cost reductions will exceed $38 million. Concurrently with the efforts described above, the Debtors continue to work diligently to develop the optimal exit from Chapter 11. The Debtors filed an amended Plan and Disclosure Statement and are continuing to negotiate the terms with the parties in interest, including but not limited to the Debtors’ pre-petition secured lenders, the Creditors’ Committee and the Equity Committee. The Debtors have also negotiated an extension of certain milestones under the Final ABL DIP Order to provide adequate time for filing the amended Plan and soliciting acceptances of same. Given that the Disclosure Statement hearing is on November 16, 2020, and the Plan confirmation hearing is set for December 22, 2020, solicitation cannot be completed within 180 days of the Petition Date.”
The Court scheduled a hearing on the motion for November 23, 2020.
About the Debtors
Tuesday Morning Corporation (NASDAQ: TUES) is one of the original off-price retailers specializing in name-brand, high-quality products for the home, including upscale home textiles, home furnishings, housewares, gourmet food, toys and seasonal décor, at prices generally below those found in boutique, specialty and department stores, catalogs and on-line retailers. Based in Dallas, Texas, the Company opened its first store in 1974 and at filing operated 687 stores in 39 states.
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