rue21 filed with the U.S. Bankruptcy Court an emergency motion for entry of interim and final orders (i) authorizing the Debtors to assume a consulting agreement and (ii) approving procedures for store closing sales. Gordon Brothers Retail Partners is the consultant.
Court-filed documents note, “The liquidation of the Store Closure Assets is expected to yield approximately $37 million in net proceeds. The Store Closings began on or about April 14, 2017 and are expected to continue until at least June 25, 2017. The Debtors seek to assume the Consulting Agreement and allow the Consultant to continue its work uninterrupted. The Debtors have determined that: (a) the services of the Consultant are necessary for a seamless and efficient large-scale store closing process, as is contemplated by this Motion, and to maximize the value of the assets being sold; and (b) the Consultant is capable of performing the required tasks on favorable financial terms. The Consultant’s affiliate, Gordon Brothers Asset Advisors, has on prior occasions performed appraisals of the Debtors’ assets on behalf of certain interest parties.”
In addition, “The Merchant shall pay the Consultant an “Incentive Fee” equal to one and a half percent (1.5%) of Gross Proceeds. On a weekly basis in connection with each weekly reconciliation contemplated by Section 5(B) of the Consulting Agreement, the Merchant shall pay the Consultant an amount equal to one and a half percent (1.5%) of Gross Proceeds on account of the prior week’s sales as an advance on account of the Incentive Fee. Merchant shall fund to Consultant $245,000 (the “Special Purpose Payment”) which shall be held by Consultant until the Final Reconciliation….Delaying the Store Closings and Store Closing Sales may cause the Debtors to pay additional postpetition rent at many of these stores, at a possible cost to the estate of up to $3.5 million per month.”
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