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Brookstone – Unsecured Creditors Committee Backs Authentic Brands Bid Over Rival Bid of Bluestar Alliance

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September 5, 2018 – Brookstone’s Official Committee of Unsecured Creditors filed with the Court a redacted objection [Docket No. 319] to Debtors’ motion outlining bidding protections for the sale of the Debtors’ intellectual property assets to a newly-formed subsidiary or affiliate of Bluestar Alliance, LLC [Docket No. 287]. The Committee’s objection cites concerns over the Bluestar bid and believes the Authentic Brands Group bid to be superior and “represents the best and perhaps only chance of a going-concern transaction that could preserve a significant portion of the Debtors’ mall and airport stores.”

The Committee asserts, “Over the past 10 days, the Debtors received multiple proposals for stalking horse designation from Bluestar and Authentic Brands Group (‘ABG’). Over the past 36 hours, both Bluestar and ABG have each submitted proposed asset purchase agreements (‘APAs’) memorializing and documenting their stalking horse bids. The bid submitted by Bluestar provides for the purchase of the Debtors’ intellectual property assets for a cash purchase price of $43 million. The Bluestar bid makes only vague reference to a potential going-concern transaction, while remaining silent on the assumption of liabilities related to the Debtors’ real property and payment of cure costs. The APA submitted by ABG provides for an alternative IP or going-concern transaction (which election shall be made no later than September 19, 2018) for the purchase of the Debtors’ intellectual property assets or a going-concern purchase of the company…The purchase price for either transaction is $50 million. The APA submitted by ABG expressly contemplates an assumption of liabilities related to the Debtors’ real property and payment of cure costs for Assumed Contracts in the event of a going-concern transaction, and provides for the purchase of limited causes of action related to Assumed Contracts only. The APA submitted by ABG is the superior bid. Not only does it provide for $7 million of additional cash consideration, but it represents the best and perhaps only chance of a going-concern transaction that could preserve a significant portion of the Debtors’ mall and airport stores, an ongoing business relationship with the Debtors’ vendors and landlords, and jobs for hundreds of the Debtors’ employees. Moreover, having previously stewarded a going concern purchase of Aéropostale, a retailer currently operating more than 500 retail stores that was once on the brink of chapter 11 liquidation, ABG has an established track record in executing retail going-concern transactions. Under these circumstances, the Committee submits that the best interests of these estates will be served by designating ABG as the stalking horse bidder…. While the most recent ABG bid was technically submitted after the deadline set forth in the Bidding Procedures, the ABG bid should be accepted because it is a superior bid and no parties would be prejudiced by its acceptance.”

The Committee also requested that the Court file its objection under seal [Docket No. 320]. The Committee asserted, “The adjudication of the Bid Protection Motion and the Objection requires the discussion and review of certain confidential information the Committee received from the Debtors and the proposed stalking horses. Accordingly, the Committee submits that the confidential information constitutes ‘commercial information’ and should be subject to the protections of section 107(b) of the Bankruptcy Code.”

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