New York City -- Loehmann's Holdings filed a Chapter 11 reorganization plan that includes a stock-rights offering backed by its Dubai-based owner, according to a Friday report by Bloomberg. The plan also includes a requirement that the Loehmann’s seek approval to sell its assets.
The bankrupt apparel retailer will sell $25 million in convertible preferred stock as part of its Chapter 11 plan, according to papers filed Wednesday in U.S. Bankruptcy Court in Manhattan. A motion to authorize the sale of assets must be filed by mid-January, according to Bloomberg.
New York City-based Loehmann’s filed a Chapter 11 plan on Nov. 15, which was negotiated with Loehmann’s owner Istithmar Retail Investments and a noteholder Whippoorwill Associates.
Istithmar and Whippoorwill both agreed to backstop the stock-rights offering.
Under terms of a $45 million financing agreement with Crystal Financial that will allow the company to exit bankruptcy, Loehmann's agreed to a series of deadlines for actions including the pursuit of an asset sale. By Jan. 14, Loehmann's must seek bankruptcy court “authorization to conduct a sale of all or substantially all of their assets, as either a going concern business or through ‘going out of business' sales,” according to the disclosure statement, which explains the reorganization plan.
Other deadlines in the financing agreement are Feb. 7 for the entry of an order confirming the Chapter 11 plan and Feb. 18 for its effective date, when Loehmann's would emerge from bankruptcy. If the plan isn't confirmed, an order authorizing the sale of the assets must be filed by Feb. 23, reported Bloomberg.