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Hancock Fabrics Bid Procedures Approved

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According to the U.S. Bankruptcy Court docket, the Court approved Hancock Fabrics’ motion for an (i) order approving (a) bid procedures, (b) procedures for assumption and assignment of executory contracts and unexpired leases and (c) related notices and relief and (ii) order approving (a) sale of substantially all assets free and clear of all liens, claims, encumbrances and other interests, (b) assumption, assignment and sale of executory contracts and unexpired leases (under Bankruptcy Code Sections 363 and 365) and (c) related relief.

As previously reported, “The Back-up Bid will set a floor for the Auction in the event that a going concern bid has not been fully developed by that time. The Back-up Bidder has agreed to accept a significantly lower break-up fee in the event any over bid is a going concern bid that is a qualified bid received by the required date, allowing the Debtors to complete a going concern transaction without incurring excessive additional cost. At the same time, the Back-up Bid assures the Debtors senior secured creditors that the sale process will result in the maximization of the value of their collateral.”

Court-filed documents continue, “Pursuant to the Back-up Bid agreement, the Back-up Bidder will pay to the Debtors a guaranteed amount equal to 108% of the cost value of its inventory (‘the Guaranteed Amount’). Eighty-five percent (85%) of the Guaranteed Amount will be paid to the Debtors by the Back-up Bidder upon the commencement of the proposed going-out-of- business sales, with the remainder of the Guaranteed Amount paid at the completion of the sales…The back-up bid agreement provides for the payment of a break-up fee of (i) $180,000; or (ii) $700,000 of termination payment and $100,000 as the expense reimbursement. A bid will be considered a qualified bid if its offers to pay a credit bid or a credit bit and cash price greater than the aggregate consideration offered by the back-up bidder (purchase price plus termination payment and expense reimbursement) by at least $250,000 A bid must be accompanied by a 10% of the aggregate cash component of the proposed purchase price (good faith deposit).”

According to documents filed with the Court, the deadline to submit qualified competing bids is March 24, 2016. An auction, if necessary, will be conducted on March 29, 2016, followed by a March 31, 2016 sale hearing.” Read more retail bankruptcy news.