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.”
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