Le Tote’s Chapter 11 plan effective as of March 31

By Sarah Lizee

Olympia, Wash., April 1 – Le Tote, Inc.’s Chapter 11 plan went into effect on Wednesday, according to a notice filed with the U.S. Bankruptcy Court for the Eastern District of Virginia.

The plan was confirmed on March 24, as previously reported.

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 or 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.

Holders of intercompany claims and Le Tote interests will receive no distributions.

Intercompany interests will be reinstated only to maintain the debtors’ corporate structure.

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.

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