Hoop Holdings files plan of reorganization; creditors to be paid from liquidating trust

By Jennifer Lanning Drey

Portland, Ore., Oct. 3 - Hoop Holdings, LLC filed its plan of reorganization and related disclosure statement Thursday with the U.S. Bankruptcy Court for the District of Delaware.

The plan of reorganization provides for the estate assets of Hoop Holdings, its wholly owned retail subsidiary, and Canada Holdings to be placed in a liquidating trust, which will be overseen by a liquidating trustee.

Initially, the liquidating trustee will be Perry Mandarino, current chief restructuring officer.

According to the disclosure statement, Hoop sold its Disney Store North America business on April 30 for between $50 million and $55 million. The company said the exact purchase price is still being finalized because it is subject to a post-closing adjustment based on final inventory numbers.

Hoop also sold the Disney Store North America headquarters in Pasadena, Calif., for $4 million.

Affiliates of the Walt Disney Co., T2 Acquisition, LLC and T1 WDC Inc. were the purchasers, according to a filing with the Securities and Exchange Commission.

The bankruptcy court approved the sale in April, according to the disclosure statement.

Creditor treatment

Creditor treatment under Hoop's plan of reorganization includes:

• Holders of between $19 million and $24 million of administrative claims will receive a full cash recovery;

• Holders of secured claims will, at the option of the liquidating trustee, either have the full amount of their claim reinstated, receive a full cash recovery or receive the full amount of collateral securing the claim. The company said secured claims held by Wells Fargo Retail Financing have already been paid, and it estimated there are no additional holders of claims in this class.

• Holders of between $85 million and $91 million of general unsecured claims will receive their share of distributable cash after priority claims and convenience claims have been paid. The class is estimated to receive a 25% to 36% recovery.

A hearing on the disclosure statement is scheduled for Nov. 4.

Children's Place settlement

Hoop's plan of reorganization also provides for a settlement between Hoop and its parent company, The Children's Place.

Under the settlement, The Children's Place will pay Hoop $4 million that was paid to it under the Disney asset purchase agreement and a lease associated with the headquarters.

Additionally, The Children's Place will release all pre-bankruptcy claims and post-bankruptcy administrative claims against Hoop.

Hoop and its official committee of unsecured creditors will release all claims against The Children's Place.

The Children's Place has agreed to provide ongoing administrative services to Hoop for up to six months at no cost.

The bankruptcy court approved the settlement in April.

The Children's Place previously estimated it held $14 million of pre-petition claims against Hoop and that it would make payments on behalf of Hoop for another $14.4 million.

The Children's Place had also been providing services to Hoop in connection to the asset sale, which would have given rise to an estimated $9.3 million post-petition claim.

Hoop claimed it held a $42.75 million claim against The Children's Place under a guaranty and commitment agreement.

Hoop also previously claimed it held a $4 million claim against The Children's Place related to a lease agreement.

Hoop, a Secaucus, N.J., company that designs, contracts to manufacture and sells merchandise under the Disney Store brand name, filed for bankruptcy on March 26, 2008. Hoop's Chapter 11 case number is 08-10544.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.