Hancock Plans August Exit from Ch. 11
Matthew Kalash -- Home Textiles Today, July 7, 2008
Hancock Fabrics has filed a plan of reorganization in the Delaware bankruptcy court that has been supported by its creditors and equity committees.
Under the plan, Hancock is poised to emerge from Chapter 11 bankruptcy in August as a stand-alone entity. General unsecured creditors will receive cash equal to 104.93% of their claims. The company filed for bankruptcy on March 21, 2007.
Hancock will emerge with the assistance of new exit financing from GE Capital, as well as mezzanine financing provided by existing equity holders through a rights offering of notes and warrants.
"We believe Hancock will be the first retailer to emerge successfully from bankruptcy as a reorganized entity since the new bankruptcy amendments were enacted in 2005," said Jay Indyke of Cooley Godward Kronish, who is acting as lead counsel for the creditors committee.
Hancock downsized from approximately 440 stores at the time of filing to its present 270 units.
"This is a very successful case not only because of the extraordinary recovery creditors are receiving, but also because the company will survive as an ongoing entity and many employee jobs will be preserved," said Cathy Hershcopf, also a partner at Cooley.
Hancock had sales of $276 million last year.