Former Charlotte Russe to have Chapter 11 bankruptcy case dismissed

By Sarah Lizee

Olympia, Wash., April 20 – CR Liquidating Holding, Inc., formerly Charlotte Russe Holding, Inc., received an order establishing procedures for dismissal of its Chapter 11 bankruptcy case, according to documents filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

The company filed a motion late last month seeking dismissal of its case, as previously reported.

When it filed bankruptcy in 2019, the debtors hoped to move forward with sales transactions that would allow them to maximize the value of their remaining inventory, intellectual property and other valuable assets.

Meanwhile, the debtors had retained ASK LLP to begin the complex process of pursuing avoidance actions on a contingency basis for the ultimate benefit of their creditors.

Early estimates of potential recoveries related to the debtors’ preference claims, combined with anticipated recoveries from the monetization of other assets, would have provided enough funds to pay all priority creditors in full with the possibility of a small recovery to unsecured creditors.

However, the actual preference recoveries fell far below those estimates, leaving a significant shortfall in funds available to pay administrative claims, the company said.

The debtors also encountered unforeseeable delays in obtaining a considerable federal tax refund in connection with the debtors’ 2019 tax filings. The refund was anticipated to play a key role in paying administrative claims.

CR Liquidating said these challenges led to delays in moving the Chapter 11 cases forward.

The debtors and their professionals, in consultation with the official committee of unsecured creditors, have explored options to bring the cases to a close, and concluded that dismissal is the most cost-effective mechanism to wind down the debtors’ affairs.

The debtors considered exiting through a Chapter 7 process but do not believe conversion would be value maximizing.

Currently, the remaining administrative claims against the debtors’ estates total about $3.6 million, and there will be about $1.9 million to distribute to those creditors.

The debtors anticipate receiving additional amounts in connection with state tax returns, but the timing of receipt of these refunds is unclear.

Charlotte Russe is a San Diego-based women’s apparel company. The company filed bankruptcy on Feb. 3, 2019 under Chapter 11 case number 19-10210.

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