Christmas Tree Shops files Chapter 11 plan, disclosure statement

By Sarah Lizee

Olympia, Wash., June 8 – Christmas Tree Shops, LLC filed a Chapter 11 plan and disclosure statement Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The plan provides for the restructuring of the debtor’s debt and the continued operation of its business. The debtor said a plan sponsor will be identified to contribute cash, commitments and other consideration to fund the plan and provide the debtor with additional working capital based on a plan funding agreement.

In exchange, the plan sponsor will receive 100% of the equity interests in the reorganized debtors.

The holders of equity interests in the plan sponsor will be identified in the plan funding agreement.

Marc and Pamela Salkovitz, who own 100% of the equity in Handil, LLC, may be interest holders in the plan sponsor. Marc Salkovitz is the executive chairman of Christmas Tree Shops.

Priority claims are unimpaired by the plan.

The debtors will pay all administrative expense claims that arose during the cases, including debtor-in-possession loan claims and claims for stub-rent for the period from the petition date through May 31.

The holders of the term loan secured claim, the Huntington secured claim and miscellaneous secured claims will receive payment of the allowed amount of the claims in monthly installments in cash, starting on the later of 30 days after the effective date or the date that the allowed claims are determined, and ending 10 years after the effective date. The payments will be based upon a 20-year amortization, and with interest fixed at the plan interest rate.

The BBBy secured claim, the Hallmark secured claim and the Leaf Capital secured claim will be treated as a general unsecured claim under class 9.

Non-priority unsecured creditors with claims against the debtors in an amount equal to or less than $25,000 are classified as holders of class 8 convenience class claims. Each holder will be entitled to receive a one-time payment equal to the lesser of a fixed amount equal to 5% of the amount of the allowed claim and $1,250.

Alternatively, these creditors can elect on their ballots treatment and payment as a holder of class 9 general unsecured claims.

Non-priority unsecured creditors with a claim against the debtors in an amount greater than $25,000, as well as class 8 holders that choose class 9 treatment, will be entitled to receive a pro rata share of the following payments that will be made to the creditors’ trust by the reorganized debtors:

• Either $583,250 or $1 million as soon as is practicable after the effective date of the plan;

• $1.25 million on or before Dec. 31, 2024;

• $1.25 million on or before Dec. 31, 2025;

• $1.5 million on or before Dec. 31, 2026; and

• $1.5 million on or before Dec. 31, 2027.

The amount of the initial payment to the creditors’ trust depends upon whether the official committee of unsecured creditors waives its rights to claims and defenses against the debtors’ prepetition senior secured creditors.

In addition, on the effective date of the plan, the debtors will be deemed to have assigned certain assigned claims and causes of action to the creditors’ trust for the benefit of holders of class 9 claims.

The debtors estimate that the distribution to holders of class 9 claims will be equal to about 7% of their allowed claims. That estimate does not include a recovery from the assigned claims and causes of action.

If a plan sponsor is not secured, the plan will not be confirmed and the debtors’ assets will likely need to be liquidated.

In that case, the debtors believe that the proceeds will be sufficient to pay only the obligations owed to some of their secured creditors and priority creditors and non-priority general unsecured creditors will not receive a recovery.

The company is proposing a disclosure statement hearing on July 7 and a confirmation hearing on Aug. 16.

Middleborough, Mass.-based Christmas Tree Shops sells home goods with a specialty focus on seasonal products. The company filed bankruptcy on May 5 under Chapter 11 case number 23-10576.

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