If you have visited a mall or shopping center in New Hampshire, then you may have shopped in or walked past a Coldwater Creek store. This women’s clothing retailer has filed for Chapter 11 bankruptcy and has undergone liquidation sales and proposed their bankruptcy exit strategy. However, it does not seem as though the creditor committee with interests still pending in the five-week case are willing to let the company proceed.
When the commercial retailer filed for bankruptcy, it planned to close its 330 stores and liquidate its assets, such as intellectual property and merchandise, at a projected total of $90 to $100 million. However, at auction, these assets brought in approximately $161 million, offered by two known liquidators. A going-out-of-business sale started on May 8 to sell leftover inventory.
With the proceeds, Coldwater Creek was able to pay off much of its debt. It resolved debts with pre-bankruptcy lenders and the liquidation of assets should allow them to do the same with term loan lenders.
The creditor committee is concerned with receiving as much payment as possible. However, the Chapter 11 plan filed by Coldwater Creek offered releases to third parties, which would include previous lenders, stockholders, past administrators and executives within the company, and others. The creditors hope that this stipulation in the plan will be dropped so that they are able to pursue potential action against those parties in order to receive additional remuneration.
Commercial businesses typically file for Chapter 11 bankruptcy in order to reorganize the business to pay creditors and other lenders more effectively and, where appropriate, restructure business plans for more success while seeking relief from debt.
Sometimes bankruptcy cannot be avoided. Chapter 11 bankruptcy and other types of bankruptcy can provide individuals and businesses with debt relief. When considering bankruptcy as an option to reorganize or liquidate debt, it is a good idea to consult an attorney who can provide advice on the bankruptcy procedure.
Source: The Wall Street Journal, "Coldwater Creek creditors oppose bankruptcy-exit plan," Sara Randazzo, May 15, 2014