ABC Carpet & Home gets approval of bid procedures, DIP financing

By Sarah Lizee

Olympia, Wash., Oct. 4 – ABC Carpet Co., Inc., which does business as ABC Carpet & Home, received court approval of the bid procedures for substantially all of its assets, as well as final court approval to access a $5.7 million debtor-in-possession facility from pre-petition lender 888 Capital Partners, LLC, according to orders filed Friday with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, prior to the bankruptcy filing, ABC had reached out to several parties to obtain financing but was not offered terms for viable financing as a result of its financial condition. As a result, the company pivoted to a going-concern sale of its assets to its pre-petition lender, 888 Capital Partners, which is acting as the proposed stalking horse bidder for the assets.

As of the petition date, the outstanding balance due on the pre-petition loan was about $8.75 million.

The lender has agreed to fund the debtor’s operations and the administration of the bankruptcy cases through a the DIP facility, with the lender credit bidding the resulting debt as well as the pre-petition secured debt.

Interest on the DIP facility will be 12% per annum, with default interest set at 15% per annum. There is a $120,000 commitment fee. The DIP facility is set to mature on Nov. 10.

The company also received final court approval to use the cash collateral of 888 Capital.

The stalking horse agreement includes a $500,000 breakup fee and a $300,000 expense reimbursement.

Under the bid procedures, the bid deadline is 4 p.m. ET on Oct. 19, an auction will be held Oct. 22 and a sale hearing will take place on Oct. 27.

The New York-based furniture retailer filed bankruptcy on Sept. 8 under Chapter 11 case number 21-11591.

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