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CRG Financial LLC (CRG) has been a leading source of funds for creditors holding claims against bankrupt entities for nearly ten years. CRG Financial LLC (CRG) offers creditors holding claims against distressed debtors an opportunity to receive liquidity for their claims and eliminate the wait and uncertainty associated with a lengthy bankruptcy proceeding. Chapter 11 and Chapter 7 bankruptcy cases can take years to conclude and the amount of creditor recovery is uncertain. Additionally, CRG provides small to mid-size loans in various special situations including DIP or Exit financing to debtors in bankruptcy cases, as well as preference or litigation financing to debtors and/or trustees to pursue claims.

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Gymboree Group, Inc – Gets Approval for Immediate Commencement of Closing Sales at 896 Stores

January 17, 2018 – The Debtors requested Court authority, subsequently granted [Docket Nos. 62 and 86], to (a) assume an agency agreement, dated as of January 16, 2019, (the “Agency Agreement”)  with Great American Group WF, Tiger Capital Group,  Gordon Brothers Retail Partners, and Hilco Merchant Resources (collectively, the  “Agent”) and (b) to conduct store closing sales at up to 896 of the Debtors’ retail stores. The order grants the Debtors the authority to begin closing sales immediately, ie from January 18, 2019, and the Debtors plan to do exactly that in respect of its 264 remaining Crazy 8 stores (where closing efforts actually began pre-petition) and its 485 remaining Gymboree locations. Notwithstanding its authority to initiate closing sales at its 147 remaining Janie and Jack stores (the "J&J Assets"), the Debtors intend to operate these stores on a going concern basis, pending planned efforts to find a buyer for this part of the Debtors' business. In respect of the J&J Assets, sales are to be referred to as "managed promotions" and not "closing sales."NB: Also on January 17, 2019, the Debtors received approval of a motion authorizing (i) bidding procedures and (ii) a stalking horse agreement with Special Situations Investment Group, Inc. in respect of the J&J Assets [Docket No. 76].The motion states, “Recognizing the need to further reduce the Debtors’ store base, prior to the commencement of these chapter 11 cases, the Debtors publicly announced their intention of closing and winding down all 264 remaining Crazy 8® store locations and significantly reducing the number of Gymboree store locations. After conducting an extensive store-by-store performance analysis of all their existing Gymboree® brand stores and a marketing process with respect to the potential sale of a portion of such stores, the Debtors and their advisors have determined that the sale of such stores is not likely to deliver the best value to the Debtors’ estates, and that they need to close and wind down all 485 remaining Gymboree® store and outlet store locations (with the remaining Crazy 8® stores, collectively, the 'Initial Closing Stores' and any such store closing sales, the 'GOB Sales') in order to maximize asset values. Notwithstanding the initiation of the GOB Sales at their Crazy 8® and Gymboree® locations, the Debtors will continue their ongoing marketing process with respect to their Janie and Jack® business. Consistent with that marketing process, the Debtors do not intend to initiate store closing sales at their Janie and Jack® store locations, but rather conduct managed promotion sales (the 'Managed Promotions' and, together with the GOB Sales, the 'Sales') at those locations. Importantly, the Managed Promotions do not spell the end of the Janie and Jack® stores and will not preclude a successful bidder from purchasing the Janie and Jack® business and continuing to operate such stores on a 'going concern' basis if contemplated by its bid. If, however, the eventual successful bidder for the Janie and Jack® business determines not to continue operating such stores, the Debtors may need to close and wind down some or all of the 147 remaining Janie and Jack® store locations (any such stores, the 'Additional Closing Stores' and, together with the Initial Closing Stores, the 'Store Closings'), in which case the Debtors intend to commence GOB Sales at the Additional Closing Stores."

David’s Bridal – Emerges from Whirlwind Chapter 11 with $450mn Debt Reduction Gift from New Owners

January 18, 2019 – The Debtors notified the Court hearing the David’s Bridal case that they had emerged from their Chapter 11 bankruptcy effective January 18, 2019 [Docket No. 290]. The Court had previously blessed the adequacy of the Debtors' Disclosure Statement and confirmed the Debtors' Joint Prepackaged Chapter 11 Plan on January 4, 2019 [Docket No. 248]. As their last act in a whirlwind 9-week bankruptcy, the Debtors also filed an amendment to their Plan Supplement which attached final forms of key corporate and financing documents [Docket No.289].In a press release announcing the emergence from bankruptcy, Scott Key, the Company's Chief Executive Officer commented, "I am excited to announce that we have successfully emerged from Chapter 11 bankruptcy on an accelerated timeline thanks to the tireless efforts of our team and our new owners' confidence in the future of our company." As described below, those new owners may not have come to the bankruptcy altar completely willingly; although they undoubtedly now wish the newly emergeds well, having provided them with a $450mn dowry of sorts via an exchange of debt for equity.The $450 million of debt reduction comes at the expense of two impaired classes that nonetheless voted overwhelmingly "I do" in support of the Plan. Particularly hard hit were the holders of the Debtors’ $270 million senior unsecured notes due October 2020; who will see all of that $270mn of debt exchanged for 8.75% of the emerged Debtors’ new common stock and warrants (the latter presumably suitable for confetti). According to the Debtors’ Disclosure Statement, that translates into a 4.4% recovery based on a $436mn valuation of the Debtors’ new equity.  Holders of the Debtors’ senior bank debt ($481.2mn as at the petition date) are in line for a 70.8% recovery based on that same new equity valuation and their receipt of 76.25% of the new common stock. In addition to equity, holders of senior debt claims will take their pro rata share in the Debtors’ new $300mn senior facility; the net result for the Debtors is the extinguishment of $181.2mn of senior bank debt. Voting results: On December 28, 2019, the claims agent notified the Court of the results of Plan voting [Docket No. 247] which were as follows: Class 4 (“Prepetition Term Loan Claims,” ie the Debtors senior lenders) – 117 claims holders, representing $463,416,557.61 in amount and 100% in number, accepted the Plan. Class 5 (“Unsecured Notes Claims,” ie the holders of the Debtors’ unsecured 2020 notes) – 59 claims holders, representing $236,343,000 (or 99.16% %) in amount and 96.72% in number, accepted the Plan. 2 claims holders, representing $2,000,000 (or 0.84%) in amount and 3.28% in number, rejected the Plan. BackgroundDavid’s Bridal, an international bridal retailer and the largest U.S. destination for bridal gowns, wedding-related apparel, social occasion apparel and related accessories and services, filed for bankruptcy on November 19, 2018 noting between 50,000 and 100,000 creditors; estimated assets between $100 million and $500 million; and estimated liabilities between $500 million and $1 billion. In a declaration in support of the Chapter 11 filing (the “Hilson Declaration”) [Docket No. 9], Joan Hilson, David Bridal’s Executive Vice President and Chief Financial and Operating Officer, outlined the events leading to the Company’s Chapter 11 filing. The Hilson Declaration noted, “Despite the significant headwinds facing the brick-and-mortar retail industry, over the past several years, the Debtors have experienced steady financial performance and only modest loss of market share. The vast majority of David’s Bridal stores generate positive EBITDA, and the Debtors have historically generated stable operating cash flows. The most significant factor leading to the commencement of these chapter 11 cases is the amount of debt on the Debtors’ balance sheet, most of which will mature with the next 12 months.” The Amendment to the Plan Supplement attached the following final form documents:Exhibit 1: Exit ABL Facility Credit AgreementExhibit 2: Priority Exit Facility Credit AgreementExhibit 3: Takeback Term Loan Credit AgreementExhibit 4: Amended Organizational DocumentsExhibit 5: New Stockholders’ AgreementExhibit 6: Warrant AgreementExhibit 8: Information Required to be Disclosed Under 1129(a)(5)

Sears Holdings Corporation – Announces Selection of ESL, and its $5.2bn Bid, as Auction Winner, Sale Expected to Close on February 8, 2019

January 17, 2019 – The Debtors announced that they had ESL Investments, Inc. (“ESL”) as the winning bidder in the Debtors’ auction.In a brief, somewhat anticlimactic, press release, the Debtors stated, “Sears Holdings Corporation …today announced that ESL Investments, Inc. was selected as the winning bidder in the Company's auction. Subject to Bankruptcy Court approval, ESL will acquire substantially all of the Company's assets, including the ‘Go Forward Stores’ on a going-concern basis for approximately $5.2 billion.The hearing to approve the sale is currently scheduled for February 1, 2019. Provided the closing conditions are satisfied, the transaction is expected to close on or about February 8, 2019.The Restructuring Committee of the Board of Directors said: ‘We are pleased to have reached a deal that would provide a path for Sears to emerge from the chapter 11 process. Importantly, the consummation of the transaction would preserve employment for tens of thousands of associates, as well as the relationships with many vendors and suppliers who provide Sears with goods and services. We would like to thank our dedicated associates, vendors and partners for their continued support through this process, and most importantly the members and customers we have the privilege to serve’."

Sears Holding – Creditors Committee Takes Off Gloves, Assails Board’s Independence and Seeks Standing to Sue ESL on Behalf of Debtors’ Estates

January 17, 2019 – The Debtors’ Official Committee of Unsecured Creditors (the “Creditors Committee”), clearly deeply disappointed by its inability to block the Debtors’ choice of ESL Investments, Inc. (“ESL”) as the winning bidder in the Debtors’ auction for going concern assets, fully opened up a new battlefront against Edward Lampert, ESL and implicitly the Debtors themselves. Until the Debtors’ announcement on January 13, 2019 that ESL would be allowed to proceed with a bid at an auction scheduled for January 16, 2019, it was widely believed that the concerns of the Credit Committee (relating to ESL's long history of related party transactions with the Debtors) had nudged the Debtors’ Board towards a liquidation; the path clearly preferred by the Creditors Committee. With those hopes emphatically dashed, it now appears that the Creditors Committee is no longer interested in the niceties required to keep open a dialogue with the Debtors and is willing to take on the Debtors and its Board in its pursuit of Lampert and ESL. The vehicle for the Official Committee’s declaration of war is a rather esoteric motion related to a request to seal Court documents [Docket No. 1598]; documents relating to transactions involving ESL and the Debtors that the Creditors Committee has promised to keep confidential ...but at this point would be perfectly happy to see made public. The heart of the motion, however, is about the Creditors Committee’s request for “leave, standing, and authority to commence and prosecute certain claims on behalf of the Debtors’ states,” that is, to sue Lampert and ESL as if standing in the Debtors’ shoes. As the motion points out, “the Debtors—led by Board members who were handpicked by and are beholden to Lampert and ESL—have capitulated to Lampert’s and ESL’s efforts to control the remaining assets of Sears and deprive unsecured creditors, already damaged by Lampert’s and ESL’s multi-year and multi-faceted scheme, of any chance of a recovery.” The Creditors Committee motion begins dramatically and continues emphatically from there, “Shortly after 3 a.m. this morning, the Debtors officially closed  the auction  for the sale of substantially all of the Debtors’ assets with an announcement that ESL Investments, Inc. was the successful bidder. For myriad reasons that will be set forth fully before this Court in the coming days, the Creditors’ Committee opposes the proposed sale. At this critical juncture of the Debtors’ Chapter 11 Cases, the Creditors’ Committee seeks to file the Standing Motion and Proposed Complaint seeking standing to assert causes of action on behalf of the Debtors’ estates against Edward S. Lampert ('Lampert'), (Chairman of the Board and former CEO of Holdings, ESL (Lampert’s investment firm and, with Lampert, Holdings’s controlling  shareholder),  and Kunal S. Kamlani ('Kamlani') (ESL’s President and a director of Holdings).  The  Creditors’ Committee believes that these causes of action should be litigated in open court but is  complying with its obligations under the  Amended Stipulated  Protective Order to file  the  Standing  Motion  and Proposed Complaint under seal because certain materials relied on or cited to in the Sealed Documents were designated by producing parties as “Confidential”  or “Highly  Confidential.”  For the avoidance of doubt, the Creditors’ Committee does not believe that any of the information referred to in the Standing Motion or Proposed Complaint should be withheld from the public.” Since its appointment, the Creditors’ Committee and its professionals have spent considerable time and energy investigating the prepetition transactions and conduct that led to the Debtors’ bankruptcy filing. The Creditors’ Committee has uncovered facts demonstrating that Sears’s downfall—while, like the financial struggles of other big  box retailers, was caused in  part  by the Internet age and other factors beyond Sears’s control—also was precipitated by years of misconduct by Lampert, ESL, and others  against Sears and its creditors. By accepting ESL’s bid to acquire Sears, made in large part through a credit bid of disputed claims, the Debtors—led by Board members who were handpicked by and are beholden to Lampert and ESL—have capitulated to Lampert’s and ESL’s efforts to control the remaining assets of Sears and deprive unsecured creditors, already damaged by Lampert’s and ESL’s multi-year and multi-faceted scheme, of any chance of a recovery. In the Sealed Documents, the Creditors’ Committee seeks standing on behalf of the Debtors’ estates to remedy the injustices that the Defendants have perpetrated on Sears and its stakeholders.”

Checkout Holding – Court Approve $275mn of DIP Financing ($125mn of New Money) on Final Basis and Confidential Treatment of JP Morgan DIP Fee Letter

January 17, 2019 – The Court hearing the Checkout Holding case issued a final order [Docket No. 222] (i) authorizing the Debtors to obtain $275.0mn in debtor-in-possession (“DIP”) financing (including a roll-up of $150mn in prepetition first lien debt) and (ii) approving the Debtors’ request for confidential treatment of the entirety a DIP fee letter entered into between the Debtors and JPMorgan Chase Bank, N.A., in its capacity as administrative agent and arranger (“JPMorgan”) [Docket No. 95]. On December 13, 2018, the Court had approved interim access to $60mn of DIP financing.As previously cited from the Debtors' motion requesting DIP financing [Docket No. 106], “The Debtors require immediate access to DIP Financing and the authority to use cash collateral to ensure that they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course. The Debtors are entering chapter 11 with a de minimis cash balance and their operating cash flow is insufficient to fund projected ongoing operations and expenses, including expenses associated with these Chapter 11 Cases. In addition to the funding needs of the Debtors’ businesses in the ordinary course and the expenses associated with these Chapter 11 Cases, the commencement of chapter 11 proceedings may further strain the Debtors’ liquidity due, among other things, to the nature of the Debtors’ businesses and its important counterparties and customers.” The final order states, “The DIP Facility is hereby approved on a final basis. The Debtors are hereby authorized to (i) continue incurring and performing under the DIP Documents, (ii) subject to the terms of the DIP Credit Agreement, borrow up to $125,000,000.00 and (iii) incur the DIP Roll-Up Loans. The proceeds of the DIP Loans shall be used for, subject to the terms of this Final Order, the DIP Documents and the Approved Budget.”Summary of Key DIP Facility Terms Borrower: Checkout Holding Corp.Guarantors: Each of the Persons set forth on the signature pages that are parties hereto as “Parent Guarantors,” and each of the Wholly-Owned Domestic Subsidiaries of the Borrower from time to time parties hereto as “Subsidiary Guarantors,” each as a debtor and debtor-in-possession Lenders: Each lender from time to time party to the DIP Credit Agreement including each “Lender” under and as defined in the Pre-Petition First Lien Credit Agreement that elects, by notice to the Administrative Agent and the Borrower, to become a lender hereunder DIP Agent: JPMorgan DIP Facility: A secured term loan credit facility in an aggregate principal amount of $275mn Borrowing Limits: Upon entry of the Interim Order, $60mn. Following entry of the Final Order (as defined below), and subject to the terms of the DIP Credit Agreement, an additional $65mn (and $150mn being rolled up on a final basis).Interest Rates & Fees:  The Eurocurrency Rate or Base Rate, as applicable, plus the Applicable Rate per annum; where “Applicable Rate” means (i) with respect to any Roll-Up Loans, a percentage per annum for Eurocurrency Rate Loans or Base Rate Loans equal to 5.50% or 4.50%, respectively, and (ii) with respect to any New-Money Loans, a percentage per annum equal to (x) in the case of Eurocurrency Rate Loans 10.00% or (y) in the case of Base Rate Loans 9.00%, as applicableDefault interest at 2% per annumCertain additional fees and expenses, including, (i) a closing payment in an amount equal to 2.00% of the DIP Commitments, payable in cash at closing; (ii) a ticking premium equal to 5.00% per annum on the actual daily amount of unused DIP Commitments, payable on a monthly basis; and (iii) an administrative agent fee, payable in cash at closingMaturity Date: June 14, 2019 Use of DIP Proceeds: Proceeds of the DIP Loans under the DIP Facility and the Use of Cash Collateral will be used solely for the following: (a) working capital and letters of credit, (b) other general corporate purposes of the Debtors; (c) permitted payment of costs of administration of these Chapter 11 Cases; (d) payment of such other prepetition obligations as consented to by the DIP Agent, such consent not to be unreasonably withheld, and as approved by this Court; (e) payment of interest, fees and expenses (including without limitation, legal and other professionals’ fees and expenses of the DIP Agent and DIP Lenders) owed under the DIP Documents; (f) payment of certain adequate protection amounts to the Prepetition First Lien Secured Parties; (g) subject to entry of a Final Order, the roll-up of a portion of the Prepetition First Lien Obligations into DIP Obligations; and (h) payment of the Carve-Out.Milestones: The Loan Parties shall have caused the following to occur by the times and dates set forth below:(a) Commencement of solicitation by December 12, 2018 (b) Interim DIP order entered by no later than 5 calendar days after the Petition Date (c) Either (A) the NCS JV Agreements have been amended to the satisfaction of the Requisite First Lien Lenders or (B) a motion to reject the NCS JV Agreements is pending before the Bankruptcy Court by no later than 30 calendar days after the Petition Date, (d) The Bankruptcy Court shall have entered an order authorizing the assumption of this Agreement by no later than 45 calendar days after the Petition Date (e) The Final DIP Order shall have been entered by no later than 40 calendar days after the Petition Date (f) Either (A) the NCS JV Agreements have been amended to the satisfaction of the Requisite First Lien Lenders or (B) the Bankruptcy Court has entered an order rejecting the NCS JV Agreements by no later than 85 calendar days after the Petition Date(g) The Bankruptcy Court shall have entered an order approving the Disclosure Statement by no later than 85 calendar days after the Petition Date (h) The Bankruptcy Court shall have entered an order confirming the Plan by no later than 125 calendar days after the Petition Date (i) The Effective Date shall have occurred by no later than 140 calendar days after the Petition DateUse of Cash CollateralThe Debtors further requested Court authority to use cash collateral. The motion states, “The Debtors require immediate access to DIP Financing and the authority to use cash collateral to ensure that they have sufficient liquidity to operate their businesses and administer their estates in the ordinary course. The Debtors are entering chapter 11 with a de minimis cash balance and their operating cash flow is insufficient to fund projected ongoing operations and expenses, including expenses associated with these Chapter 11 Cases. In addition to the funding needs of the Debtors’ businesses in the ordinary course and the expenses associated with these Chapter 11 Cases, the commencement of chapter 11 proceedings may further strain the Debtors’ liquidity due, among other things, to the nature of the Debtors’ businesses and its important counterparties and customers.”On December 17, 2018, the Debtors filed an execution version of the Credit Agreement entered into in respect of the DIP Facility [Docket No. 132].

Gymboree Group, Inc. – Seeks $30mn in New Money DIP from Pre-Petition Lenders

January 17, 2019 – The Debtors requested Court authority to (i) enter into interim and final debtor-in-possession (“DIP”) financing arrangements with SPECIAL SITUATIONS INVESTING GROUP, INC., as administrative agent and as collateral agent for the Lenders and (ii) use cash collateral [Docket No. 33]. The DIP financing is a $30mn new money multiple draw term loan facility (the “New Money DIP Facility”) consisting of a $10mn Class A tranche and a $20mn Class B tranche; with the entire $30mn available for draw down on the closing date. A draft of the New Money DIP Facility is attached to the motion. The motion states, “Due to the fact that all of the Debtors’ material domestic assets are encumbered, and in light of the overall weakness in the apparel retail industry, the availability of postpetition financing for the Debtors was severely restricted….Relatedly, the Debtors could not provide evidence or certainty of a sufficient equity cushion to allow for debtor-in- possession financing that would prime the liens of the Prepetition Secured Parties over their objections. For the same reason, no third parties, other than the Debtor’s existing lenders, was willing to provide debtor-in-possession financing junior to the Debtors’ prepetition facilities, and the Debtors did not receive any viable offers from third parties despite their marketing efforts….Concurrently with ‘shopping’ postpetition financing to the financial community at large, the Debtors approached its Prepetition Secured Parties to explore financing options. On January 9, 2019, the Debtors received a proposal from the Prepetition Term Loan Lenders…After arms’-length, good faith negotiations, the Prepetition Term Loan Lenders agreed to provide the postpetition financing… The DIP Facility provides the Debtors with the funding needed to pay expenses during the pendency of the cases and to pursue a path to maximize the value of their assets. Absent the DIP Facility, the Debtors would run out of cash and be forced to immediately liquidate, resulting in significant harm to the Debtors’ thousands of employees (through immediate loss of employment), vendors (through loss of future orders), and landlords (through loss of a future rent payments). In contrast, access to the DIP Facility would provide the Debtors with sufficient liquidity to liquidate their inventory in an orderly fashion and maximize the value of certain of their brands. Additionally, by obtaining financing from the Prepetition Term Loan Lenders, the Debtors avoid a costly and time-consuming priming fight at the outset of these chapter 11 cases and save significant time that third party lenders would have expended on due diligence.” Summary of the Material Terms of the Proposed DIP Financing (defined terms are as defined in the New Money DIP Facility) Guarantors: Gymboree Intermediate Corporation, Gymboree Retail Stores, LLC, Gymboree Manufacturing, Inc., Gymboree Operations, Inc., Gym-Mark, Inc., Gym-Card, LLC, Gymboree Wholesale, Inc., and Gymboree Distribution, Inc.Entities with Interests in Cash Collateral:  Prepetition Term Loan Lenders under the Prepetition Term Loan Agreement and the Prepetition ABL Lenders under the Prepetition ABL Agreement.Interest Rate:With Respect to Class A DIP Loans, either LIBOR plus 8.25% per annum (subject to a 2% LIBOR Floor) or Adjusted Base Rate plus 7.25% per annum.With Respect to Class B New Money DIP Loans, either LIBOR plus 11.25% per annum (subject to a 2% LIBOR Floor) or Adjusted Base Rate plus 10.25% per annum.Fees: The following fees are payable in connection with the DIP Loans:A Commitment Fee of 2% of the aggregate principal amount of the New Money DIP Loans, payable on the Closing Date.An Agency Fee set forth in the Fee Letter, payable on the Closing Date.A Make-Whole Amount, payable in the event the Class A DIP Loans are voluntarily prepaid or mandatorily prepaid upon consummation of an asset sale or receipt of casualty proceeds, letter of credit proceeds, or other extraordinary receipts, a Make-Whole amount equal to 4.25% of the principal of such prepaid Class A DIP Loans plus all interest that would have been payable on such loans through the Stated Maturity Date.Term: Stated Maturity Date - The earliest of (i) the date that is 210 days after the Petition Date, (ii) if the Final Order has not been entered, the date that is 35 calendar days after the Petition Date, (iii) the acceleration of the DIP Loans, and (iv) the effective date of an Acceptable Plan (as defined in the DIP Agreement).Roll-up: The DIP Documents provide for a roll-up the Prepetition Term Loan Facility. Under the terms of the DIP Agreement, upon entry of the Interim Order, the Initial Roll-Up DIP Loans will be rolled-up into loans deemed outstanding under the DIP Facility. Upon entry of the Final Order, the Final Order Roll-Up DIP Loans will be converted.

Specialty Retail Shops Holding Corp. (Shopko Stores) – Creditor McKesson Corporation Objects to Use of Cash Collateral

January 16, 2019 – Creditor McKesson Corporation (“McKesson”), filed an objection to the Debtors' emergency motion for debtor-in-possession (“DIP”) financing [Docket No. 35].  The objection states, “McKesson holds a valid reclamation claim against the Debtor in connection with goods delivered to the Debtor prepetition and valued at approximately $67.2 million. McKesson objects to the DIP Financing Motion only to the extent that it (along with the proposed DIP financing agreement and order) impermissibly impairs McKesson’s reclamation rights and it marshalling rightsPrior to the commencement of its bankruptcy case, the Debtor purchased the vast majority of its medical-surgical supplies and equipment from McKesson. During the 45 days immediately prior to the Petition Date (the ‘Reclamation Period’), the Debtor purchased and received over $61,000,000 in pharmaceutical goods from McKesson (the “Reclamation Goods”). On December 30, 2018, 17 days prior to the Petition Date, McKesson transmitted to the Debtor (via facsimile, overnight mail and electronic mail) a demand for the immediate return of the goods received by the Debtor during the Reclamation Period pursuant to Wis. Stat.§ 402.702 (the 'Reclamation Demand Letter')....The Debtor failed to comply with McKesson’s lawful demand for return of the Reclamation Goods. Instead, the Debtor continued to sell the Reclamation Goods, causing irreparable harm to McKesson. With no other alternative to preserve its rights to reclaim the goods, on January 4, 2019 McKesson filed a Complaint seeking reclamation of the Reclamation Goods, along with causes of action for replevin and breach of contract (the 'Complaint') in the State of Wisconsin Circuit Court for Brown County (the 'Wisconsin State Court'), commencing case number 19-CV-33 (the 'State Court Action). Concurrently with the filing of the Complaint, McKesson filed its Ex Parte Motion for Temporary Restraining Order and Temporary Injunction seeking an order prohibiting the Debtor from selling, moving, relocating, or destroying any pharmaceutical goods delivered by McKesson to any of the Debtor’s stores on or after November 11, 2018 (the 'TRO Motion'). An initial hearing on the TRO Motion was held on January 7, 2019 ('the TRO Hearing). Concluding that there could be negative public health effects if the TRO Motion were granted, the Wisconsin State Court denied McKesson’s request and scheduled a hearing to consider a preliminary injunction on January 24, 1019. The DIP Financing Motion seeks approval of the DIP Financing Order and the DIP Financing Agreement. Those documents include provisions that impermissibly impair McKesson’s reclamation rights and marshalling rights by granting to the DIP lender liens securing the Post-Petition Obligations (which include Pre-Petition Obligations) senior in priority to all claims, including McKesson’s Reclamation Rights and marshalling rights."

Gymboree Group, Inc – Files Chapter 11, Looks to Wind Down Gymboree and Crazy 8 Operations, Sell Janie and Jack business as Going Concern

January 17, 2019 – Gymboree Group and 10 affiliated Debtors (“Gymboree” or the “Company”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of Virginia, lead case number 19-30258. The Company, a portfolio of children's brands operating 380 specialty retail stores with clothing and accessories for children in the U.S. and Canada , is represented by Michael A. Condyles of Kutak Rock. Further board-authorized engagements include (i) Milbank, Tweed, Hadley & McCloy LLP (“Milbank”) as general bankruptcy counsel, (ii) . Stifel, Nicolaus & Company, Incorporated (“Stifel”) as investment banker and financial advisor, (iii) Berkeley Research Group, LLC (“BRG”) as financial advisor, (iv) Prime Clerk LLC as claims agent and (v) Hilco Real Estate, LLC (“Hilco”) as real estate consultant.The Company’s Canadian subsidiary, Gymboree, Inc., intends to seek protection in proceedings pursuant to the Bankruptcy and Insolvency Act of Canada (“BIA”) in the Ontario Superior Court of Justice (Commercial List). Gymboree Group intends to use these proceedings to facilitate an orderly wind-down of all of its Gymboree and Crazy 8 store locations and operations, while continuing to pursue a going-concern sale of its Janie and Jack business and a sale of the intellectual property and online platform for Gymboree.The Company’s petition notes between 5,000 and 10,000 creditors; estimated assets between $100mn and $500mn; and estimated liabilities between $50mn and $100mn. Documents filed with the Court list the Company's three largest unsecured creditors as (i) Hansoll Textile LTD ($12.1mn trade claim), (ii) Tip Top Fashions Limited ($9.7mn trade claim) and (iii) Pan Pacific Co Ltd ($7.1mn trade claim).Chapter 22: Swings and RoundabaoutsThis is the second Chapter 11 for Gymboree in under 2 years, the Debtors having previously announced a pre-negotiated Chapter 11 plan on June 11, 2017 and having emerged from that bankruptcy on September 29, 2017. In its first turn on the bankruptcy roundabout, Gymboree cancelled $171 million of its then-outstanding unsecured notes were cancelled and approximately $770mn of Gymboree’s then-outstanding funded debt was converted into equity. Additionally, the Company raised $80mn of new capital through a rights offering; and arranged $285mn in exit financing.Events Leading to the [second] Chapter 11 Filing [in 19 months]In a declaration in support of the Chapter 11 filing (the “Coulombe Declaration”) [Docket No. 11], Stephen Coulombe, Gymboree’s Chief Restructuring Officer, detailed the events leading to the Company’s Chapter 11 filing, citing its inability to (i) withstand competition from other direct bricks and mortar competitors as well as an assault from discount stores, internet retailers, and big-box retailers competing on price and (ii) respond to chnaging customer preferences.The Coulombe Declaration states, “Gymboree emerged from the Prior Cases with a substantially less leveraged capital structure and significantly reduced store count….Since the 2017 Plan Effective Date, Gymboree has closed additional stores, including all stores in South Korea and Australia, bringing its retail footprint to the current operating count of approximately 945 retail stores (excluding franchisees)….Nevertheless, Gymboree continued to face significant operational challenges that persisted after emergence from the Prior Cases. The brick and mortar retail children’s clothing industry has remained highly competitive. Gymboree has faced competition from direct competitors, such as Children’s Place and the Gap, and indirect competition from discount stores, internet retailers, and big-box retailers that sell clothing at increasingly cheaper prices. Furthermore, the industry-wide trend of commerce moving to online channels has resulted in shrinking in-store profit margins and declining profitability, as well as a larger-than-expected decline in Gymboree’s retail sales volumes in brick and mortar stores. Gymboree’s comparable store sales are in decline. Similarly, Gymboree’s wholesale platform, which facilitates the sale of large quantities of merchandise to bulk retailer, has performed below expectations. Net retail sales during the nine months ended November 3, 2018 decreased to approximately $573 million from approximately $785 million during the nine months ended October 28, 2017, a decrease of $212 million, or approximately 27.0%.In addition to depressed sales, changing customer tastes and a merchandising strategy that did not timely achieve its expected results necessitated discounting across all channels (including online), making it increasingly difficult for the Debtors to support their cost and capital structure. Gymboree’s gross profits deteriorated from approximately $274 million for the nine months ended October 28, 2017 to approximately $171 million for the nine months ended November 3, 2018. As a percentage of net sales, gross profits during the nine months ended November 3, 2018 decreased to 29.8% from 34.8% during the nine months ended October 28, 2017, driven primarily by clearance sales."

Specialty Retail Shops Holding Corp. (Shopko Stores) – Proposes Bidding Procedures for Sale of Pharmacy Assets, Seeks Expedited Timetable for “Melting Ice Cube”

January 16, 2019 – The Debtors requested Court approval of proposed bidding procedures for the sale of its remaining pharmacy assets ("Pharmacy Assets") [Docket No. 27]. The Debtors motion also attached a form of asset purchase agreement that it would expect prospective bidders to execute in the event that a bid was chosen as the successful bid. Clearly time is of the essence; with the Debtors stressing the importance of speed to the capture of value in respect of the Debtors’ the Pharmacy Assets. The motion notes, “The Debtors seek to accelerate the process for a potential sale disposition of certain of their Pharmacy Assets. To that end, the Debtors have commenced these chapter 11 cases to facilitate a timely and efficient process that will monetize the Debtors’ assets and maximize the value of the Debtors’ estates….Since beginning the marketing process in June 2018, the Debtors have diligently worked  with their financial advisors to  develop and explore several strategic alternatives to maximize value for the Debtors’ Pharmacy Assets. The Bidding Procedures represent the final stage of a thorough and effective marketing process conducted by Houlihan Lokey, Inc. (‘Houlihan Lokey’) the Debtors, and the Debtors’ other advisors over the course of nearly six months.  The process was designed to solicit bids for the Debtors’ Pharmacy Assets and obtain the greatest proceeds to maximize the value for the Debtors’ stakeholders. Having begun the process with approximately 234 pharmacy locations, following these negotiations, the Debtors and Houlihan Lokey identified 134 locations with attractive bids from 6 parties for the purchase of the Pharmacy Assets. Of these 134 locations, the Debtors were able to execute and close agreements for 82 of the locations. In addition to the marketing process, which was a robust process to identify the bidders that would offer the best possible price for the Pharmacy Assets, the Debtors have also proposed these Bidding Procedures in connection with the process to sell, liquidate, or otherwise cause the disposition of the Debtors’ Pharmacy Assets of the remaining 146 locations.The Debtors’ motion breaks down the need for speed as follows: “ First, the Pharmacy Assets are the quintessential “melting ice cube,” where the value of such assets is decreasing by each daySecond, certain of the Debtors’ inventory suppliers, including McKesson Corporation (‘McKesson’), have stopped supplying inventory to the Debtors, making it imperative that Debtors can continue to service their existing customers while completing the final stages of the marketing and sale process for the Pharmacy Assets. Third, no party will be prejudiced by the bidding process described herein because Wells Fargo Bank, N.A…which acts as agent for the parties that have lent money to the Debtors and for which the Pharmacy Assets serve as collateral, supports the proposed sale process outlined in this Motion.Fourth, pursuant to the debtor-in-possession financing facility…the Debtors must satisfy certain milestones with respect to the Pharmacy Assets, including conducting an auction on or before the tenth day following the Petition Date, among other milestones….Failure to adhere to the milestones included in the DIP Orders would have severe consequences and threaten the Debtors ability to continue along the best path for the Debtors and maximize the value of their estates.” Key Dates:Bid Deadline: January 21, 2019 Auction: January 23, 2019 Transaction Objection Deadline: January 25, 2019 Reply Deadline: January 28, 2019 Transaction Hearing: January 28, 2019 

Gymboree Group, Inc – Files Chapter 11, Looks to Wind Down Gymboree and Crazy 8 Operations, Sell Janie and Jack business as Going Concern

January 17, 2019 – Gymboree Group and 10 affiliated Debtors (“Gymboree” or the “Company”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Eastern District of Virginia, lead case number 19-30258. The Company, a portfolio of children's brands operating 380 specialty retail stores with clothing and accessories for children in the U.S. and Canada , is represented by Michael A. Condyles of Kutak Rock. Further board-authorized engagements include (i) Milbank, Tweed, Hadley & McCloy LLP (“Milbank”) as general bankruptcy counsel, (ii) . Stifel, Nicolaus & Company, Incorporated (“Stifel”) as investment banker and financial advisor, (iii) Berkeley Research Group, LLC (“BRG”) as financial advisor, (iv) Prime Clerk LLC as claims agent and (v) Hilco Real Estate, LLC (“Hilco”) as real estate consultant.The Company’s Canadian subsidiary, Gymboree, Inc., intends to seek protection in proceedings pursuant to the Bankruptcy and Insolvency Act of Canada (“BIA”) in the Ontario Superior Court of Justice (Commercial List). Gymboree Group intends to use these proceedings to facilitate an orderly wind-down of all of its Gymboree and Crazy 8 store locations and operations, while continuing to pursue a going-concern sale of its Janie and Jack business and a sale of the intellectual property and online platform for Gymboree.The Company’s petition notes between 5,000 and 10,000 creditors; estimated assets between $100mn and $500mn; and estimated liabilities between $50mn and $100mn. Documents filed with the Court list the Company's three largest unsecured creditors as (i) Hansoll Textile LTD ($12.1mn trade claim), (ii) Tip Top Fashions Limited ($9.7mn trade claim) and (iii) Pan Pacific Co Ltd ($7.1mn trade claim).Chapter 22: Swings and RoundabaoutsThis is the second Chapter 11 for Gymboree in under 2 years, the Debtors having previously announced a pre-negotiated Chapter 11 plan on June 11, 2017 and having emerged from that bankruptcy on September 29, 2017. In its first turn on the bankruptcy roundabout, Gymboree cancelled $171 million of its then-outstanding unsecured notes were cancelled and approximately $770mn of Gymboree’s then-outstanding funded debt was converted into equity. Additionally, the Company raised $80mn of new capital through a rights offering; and arranged $285mn in exit financing.Events Leading to the Chapter 11 FilingIn a declaration in support of the Chapter 11 filing (the “Coulombe Declaration”) [Docket No. 11], Stephen Coulombe, Gymboree’s Chief Restructuring Officer, detailed the events leading to the Company’s Chapter 11 filing, citing its inability to (i) withstand competition from other direct bricks and mortar competitors as well as an assault from discount stores, internet retailers, and big-box retailers competing on price and (ii) respond to chnaging customer preferences.The Coulombe Declaration states, “Gymboree emerged from the Prior Cases with a substantially less leveraged capital structure and significantly reduced store count….Since the 2017 Plan Effective Date, Gymboree has closed additional stores, including all stores in South Korea and Australia, bringing its retail footprint to the current operating count of approximately 945 retail stores (excluding franchisees)….Nevertheless, Gymboree continued to face significant operational challenges that persisted after emergence from the Prior Cases. The brick and mortar retail children’s clothing industry has remained highly competitive. Gymboree has faced competition from direct competitors, such as Children’s Place and the Gap, and indirect competition from discount stores, internet retailers, and big-box retailers that sell clothing at increasingly cheaper prices. Furthermore, the industry-wide trend of commerce moving to online channels has resulted in shrinking in-store profit margins and declining profitability, as well as a larger-than-expected decline in Gymboree’s retail sales volumes in brick and mortar stores. Gymboree’s comparable store sales are in decline. Similarly, Gymboree’s wholesale platform, which facilitates the sale of large quantities of merchandise to bulk retailer, has performed below expectations. Net retail sales during the nine months ended November 3, 2018 decreased to approximately $573 million from approximately $785 million during the nine months ended October 28, 2017, a decrease of $212 million, or approximately 27.0%.In addition to depressed sales, changing customer tastes and a merchandising strategy that did not timely achieve its expected results necessitated discounting across all channels (including online), making it increasingly difficult for the Debtors to support their cost and capital structure. Gymboree’s gross profits deteriorated from approximately $274 million for the nine months ended October 28, 2017 to approximately $171 million for the nine months ended November 3, 2018. As a percentage of net sales, gross profits during the nine months ended November 3, 2018 decreased to 29.8% from 34.8% during the nine months ended October 28, 2017, driven primarily by clearance sales."

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