Joe's Sports & Outdoor gets court OK of settlement for case dismissal

By Jennifer Lanning Drey

Savannah, Ga., March 11 - Joe's Sports & Outdoor received court approval of a settlement with its official committee of unsecured creditors, its pre-bankruptcy term loan B secured parties and BMC Group, Inc. under which the company's Chapter 11 bankruptcy case will be dismissed once all claims are resolved, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the motion requesting approval of the settlement, the proceeds of Joe's asset sales, together with all other estate funds collected, are not enough to pay its pre-bankruptcy term loan B secured parties' $25 million claim in full.

Under the settlement, the pre-bankruptcy term loan B secured parties will receive all cash held by Joe's estates other than $495,000 that must be transferred to a general unsecured creditors escrow account.

The settlement also calls for the transfer of $200,000 from the general unsecured creditors escrow account to Joe's in order for it to make distributions to holders of unpaid administrative priority expense claims.

Additionally, $410,000 will be transferred from the general unsecured creditors escrow account to Joe's to be added to the carveout in order to pay, in order of priority, administrative fees, $149,000 to BMC to satisfy fees and expenses through Feb. 4, 2010, payment of BMC expenses incurred from Feb. 5, 2010 to the case dismissal date and payment of unpaid fees of case professionals.

The term loan B secured parties will release any deficiency claim or adequate protection claim against the debtors' estates solely with respect to the cash/consideration to be paid or retained by Joe's estates under the settlement.

Motion to convert denied

In a separate court filing, Joe's U.S. Trustee's motion to convert the company's Chapter 11 case to Chapter 7 was denied by the U.S. Bankruptcy Court for the District of Delaware.

When requesting the conversion in February 2010, U.S. Trustee Roberta DeAngelis said Joe's had failed to pay its claims agent, failed to file monthly operating reports for nine months and had not yet proposed a plan of reorganization.

DeAngelis said the case needed to be converted to protect the interest of all of its creditors.

Joe's Sports, a Portland, Ore.-based sports and outdoor retailer, filed for bankruptcy on March 4 under the name G.I. Joe's Holding Corp. Its Chapter 11 case number is 09-10713.

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