Perfumania’s bankruptcy plan gets court approval
Perfumania Holdings received legal approval to move forward with its reorganization strategy.
The nation’s largest discount retailer of perfumes and specialty celebrity and designer fragrances filed for Chapter 11 bankruptcy protection in late August, with a goal of moving its business forward. The retailer filed with a prepackaged plan in hand that outlined the steps needed to revise its business model — a strategy that would rework $200 million in debt, according to Law360.
On Friday, the U.S. Bankruptcy Court for the District of Delaware approved the retailer’s restructuring plan, According to the new strategy, Perfumania will continue to operate as a privately-held company, and the retailer will close underperforming stores.
The company will also continue to pay vendors and suppliers in full, and cancel all outstanding shares of Perfumania common stock. However, shareholders will be given the opportunity to receive consideration of $2 per share in exchange for completing a shareholder release form.
The retailer will receive an equity infusion from certain current shareholders and holders of its unsecured debt. This equity will be used to make distributions, to fund the consideration being paid to shareholders who submit a shareholder release form, and to fund ongoing operations, Perfumania said in a statement.
The reorganization plan is expected to go into effect on Wednesday, Oct. 11, according to the company.
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