Le Tote disclosure statement, HBC settlement OK’d following amendments

By Sarah Lizee

Olympia, Wash., Feb. 2 – Le Tote, Inc.’s disclosure statement for its Chapter 11 plan and its settlement with HBC US Propco Holdings LLC and HBC US Holdings Inc. were approved Tuesday by the U.S. Bankruptcy Court for the Eastern District of Virginia.

The official committee of unsecured creditors had objected to the statement and settlement, but the group withdrew those objections Monday after the company filed amended versions of the documents.

“Following judicial mediation, the HBC secured parties have agreed to certain modifications to the HBC settlement to increase recoveries for general unsecured creditors,” the company said in a Monday filing.

“Accordingly, the official committee of unsecured creditors is now supportive of the plan and has agreed to withdraw the committee objection to the disclosure statement.”

The amended plan calls for a wind-down of the debtors’ estates that maximizes the value of all estate assets, including their remaining inventory and certain potential litigation assets stemming from the 2019 acquisition of Lord & Taylor LLC from the HBC parties.

The plan provides value to creditors by settling estate claims and causes of action against the HBC parties on account of the acquisition and the parties’ subsequent business dealings and other potential claims arising on or before the effective date of the plan.

In exchange, the HBC parties have, among other things, agreed to subordinate their secured claims under their seller note to administrative and priority claims and split recoveries on account of the debtors’ remaining assets with unsecured creditors.

Under the plan, administrative claims and other priority claims will be paid in full in cash or otherwise unimpaired.

Holders of other secured claims will receive payment in full in cash, the collateral securing their claims, or have their claims reinstated.

Holders of the seller note secured claim and general unsecured claims will receive their pro rata share of distributable cash under a waterfall recovery. Distributable cash other than Urban Outfitters proceeds will be allocated as follows: first, to holders of the seller note secured claim, until they receive $8 million on account of the seller note secured claim; second, to holders of general unsecured claims, until they have received $3 million on account of their claims; third, split 50/50 between holders of the seller note secured claim and the holders of general unsecured claims until the seller note secured claim is paid in full; and fourth, to the holders of general unsecured claims.

The Urban Outfitter proceeds will be allocated as follows: first, to holders of general unsecured claims until they have received $1 million on account of their claims; second, split 75% to holders of general unsecured claims and 25% to holders of the seller note secured claim; and third, to holders of general unsecured claims.

New York-based Lord & Taylor, a unit of Le Tote, operates fashion stores in the United States. The company filed bankruptcy on Aug. 2, 2020 under Chapter 11 case number 20-33332.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.