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July 7, 2019 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order [Docket No. 15]. The bidding procedures order would (i) approve proposed bidding procedures ("Sale Procedures") in respect of the sale of substantially all of the Debtors' assets (the "Sale"), (ii) authorize the Debtors to enter into an asset purchase agreement with a stalking horse, with any bidder protections subject to Court approval, and (iii) approve an auction and sale timetable. The sale order would authorize the Sale.
As currently drafted, the "Purchased Assets" are "all of their assets associated with the operation of their Business"; with "Business" in turn defined as the Debtors' "18 different restaurant brands in 35 locations throughout 6 states." Although bids for less than the whole are permitted, any individual partial bid will only be treated as a qualified bid if ALL such partial bids, when aggregated, top the best bid for the assets as a whole. Given the nature of the Debtors' businesses, geographically disperse and operating under 18 differentiated brands, this would seem to put the Debtors in a bind.
The clear need for speed makes a single sale/buyer attractive; but it would seem distinctly possible that a piecemeal sale, albeit more time-consuming, might generate more distributable proceeds for the Debtors' estates; especially given that the Debtors' business model (combining many distinct, one-off restaurants under one ownership in a sort of unbrand brand) has found itself in Chapter 11. The Debtors have already closed six unprofitable restaurants and have two recently launched restaurants that have struggled from their opening in late 2017. Clearly there remains a wide range in respect of the quality of the remaining, largely distinct restaurant assets.
The motion states, “As of the Petition Date, Configure [the Debtors’ investment banker] and/or the Debtors contacted approximately 69 potential strategic buyers and 213 financial buyers, out of which 45 executed confidentiality agreements and received the confidential information memorandum and access to key documents in an online data room. To date, Debtors have received initial indications interest from multiple strategic and financial buyers.
The Debtors are encouraged by the interest in a sale transaction from prospective third party buyers. The Debtors, however, have not yet finalized an initial or “stalking horse” agreement for their Purchased Assets. Consequently, the best option to obtain the highest and best offer for the Purchased Assets is pursuant to the Sale Procedures (hereafter defined). The Debtors remain optimistic that they will secure a stalking horse bidder before the proposed Sale Procedures Hearing. Accordingly, the Debtors have filed this Motion to ensure that the sale process for the Purchased Assets can be completed expeditiously, yet reserving the right to add a stalking horse bidder in the sale process in an effort to achieve maximum value for the Debtors’ stakeholders.”
- Sale Procedures Objection Deadline: August 13, 2019
- Sale Procedures Hearing: August 20, 2019
- Sale Objection Deadline: September 12, 2019
- Bid Deadline: September 13, 2019
- Auction: September 17, 2019
- Sale Hearing: September 19, 2019
- Closing Date: September 26, 2019
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