Stein Mart asks court to reconsider order denying Chapter 11 plan

By Sarah Lizee

Olympia, Wash., March 31 – Stein Mart, Inc. asked the U.S. Bankruptcy Court for the Middle District of Florida to reconsider its order denying the company’s Chapter 11 plan of liquidation, according to a motion filed Tuesday.

The court denied the plan based on concerns relating to language in the exculpation clause. Both the Securities and Exchange Commission and Region 21 U.S. trustee Nancy J. Gargula had objected to the plan, and while the SEC’s objection was overruled, Gargula’s was sustained in part.

The company said in its motion that it is seeking a revision of the exculpation clause language so that exculpated parties are not entitled to exculpation for acts involving “fraud, gross negligence and willful misconduct.”

Stein Mart said the debtors will further accept any additional language to the exculpation clause that the court deems necessary to confirm the plan.

The company said the modification of the exculpation clause is not a material change to the plan or the confirmation order, and shouldn’t require re-solicitation of the plan.

Stein Mart said the official committee of unsecured creditors is in support of the motion for reconsideration and the modification to the exculpation clause.

A status conference has been scheduled for April 8, as previously reported.

The plan contemplates that Brad Boe of Advisory Trust Group, LLC will be appointed as the plan administrator on the effective date to finalize the wind down of the debtors’ estates, monetize any remaining assets and make distributions to creditors.

Under the plan, holders of other secured claims will receive payment in full in cash or the collateral securing their claims.

Holders of administrative expense claims will receive payment in full in cash.

Holders of other priority claims will receive payment in full in cash, to the extent sufficient distributable funds are available. The debtor currently anticipates that other priority claims will be paid in full, but the final result will depend on the final, total amount of other priority claims, the amount of tax refunds recovered, the expenses of the wind-down and other factors.

Holders of letter-of-credit claims will receive payment in full in cash from the letter-of-credit reserve.

To the extent any allowed ABL claims and term loan claims remain outstanding on the effective date, each claim will receive payment in full.

Holders of general unsecured claims will receive their pro rata share of the general unsecured claims recovery until paid in full. The debtors estimate the total general unsecured claims will be between $217 million and $421 million and that the total cash distributed to general unsecured claims will be between $0 and $15 million.

Each intercompany claim will be canceled and released.

Intercompany interests and existing interests will be canceled with no distribution.

Section 510(b) claims, if any, will also be canceled with no distribution.

Stein Mart is a Jacksonville, Fla., operator of retail stores. The company filed Chapter 11 bankruptcy on Aug. 12, 2020 under case number 20-02387.

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