On April 19, 2015, Frederick’s of Hollywood, Inc., a well-known retailer of women’s lingerie, filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware. In addition to the petition filed by Frederick’s, petitions were filed by five other related entities. The cases have been assigned to The Honorable Kevin Gross, and are docketed as case no. 15-10836.
William Soncini, the Chief Operating Officer for each of the debtors since July 2014, has filed a declaration in support of the various petitions. According to the Soncini declaration, the Debtors sell high quality women’s apparel and related products under their proprietary Frederick’s of Hollywood® brand. According to Mr. Soncini, the debtors previously went through a bankruptcy filing between 2000 and 2003. Recently, “in the face of growing liquidity issues and concerns about their ability to continue operating as a publicly listed company and a going concern, the Debtors were taken private by a consortium consisting of HGI Funding, LLC . . . , Tokarz Investments, LLC, TTG Apparel, LLC, Arsenal group, LLC, Fursa Alternatives Strategies LLC and William F. Harley, III, . . . , for an aggregate transaction value of approximately $24.8 million.”
The Consortium “agreed to exchange the preferred and/or common shares it held in the Debtors for equity units in FOHG Holdings, LLC. In order for the Consortium to acquire a 100% state in the Debtors, the Debtors’ remaining other shareholders were cashed out in the [transaction] at a price of $.27 per share.”
The Soncini declaration reveals also that, as of the petition date, the Debtors had assets of approximately 36.5 million and total liabilities of $106 million. Most of the debt consists of 33 million in loans under a secured credit agreement, $16.2 million in unsecured notes and $56.7 million owed in trade debt and to landlords. The Debtors have not had a profitable year since 2007, according to Mr. Soncini.
In the bankruptcy, the Debtors hope to sell substantially all their assets through a sale, and have selected Authentic Brands Group, LLC as the stalking horse.