Peekay Acquisition files bankruptcy; lenders agree to purchase assets

By Caroline Salls

Pittsburgh, Aug. 10 – Peekay Acquisition, LLC filed Chapter 11 bankruptcy Thursday in the U.S. Bankruptcy Court for the District of Delaware.

According to a statement filed with the court by chief restructuring officer Albert Altro, “The debtors' objective in these Chapter 11 cases is the same as it has been since the middle of 2015 when it became evident that the company did not have sufficient liquidity to service its debt obligations – to restructure the company’s balance sheet in order to maximize the value of the company’s assets for the benefit of all stakeholders and to maintain the business as a going concern, thereby preserving hundreds of jobs and important vendor relationships,” Altro said.

After it became evident that the company had exhausted all of its out-of-court restructuring options, Altro said Peekay’s term A lenders submitted a stalking horse bid to purchase substantially all of the company’s assets.

Specifically, the term A lenders have agreed to credit bid their loans in the amount of $30 million up to a $31 million credit bid cap and assume liabilities to purchase substantially all of the company’s assets, subject to higher or otherwise better offers.

Competing bids are due by noon ET on Oct. 18 and must be for at least $30.1 million.

An auction will be held on Oct. 25, if necessary. Bids at auction must be made in minimum increments of $100,000.

Peekay is also seeking court approval to use the cash collateral of it pre-bankruptcy lenders to fund its operations while in bankruptcy.

According to court documents, Peekay has $10 million to $50 million in assets and $50 million to $100 million in debt.

The company’s largest unsecured creditors are:

• Kris Butt of Black Diamond, Wash., with a $5.61 million unsecured notes claim;

• Ross Jackson of Golden, Colo., with a $2.98 million unsecured notes claim;

• Gary Zebrowski of Drexel Hill, Pa., with a $2.98 million unsecured notes claim;

• Brian Barnett of Enumclaw, Wash., with a $2.32 million unsecured notes claim;

• Rick Barnett of Auburn, Wash., with a $2.32 million unsecured notes claim;

• Christopher Steward of Kirkland, Wash., with a $1.41 million unsecured notes claim; and

• Trish Don Francesco of Phoenix, with a $1.41 million unsecured notes claim.

The company is represented by Landis Rath & Cobb LLP.

Ultimate parent and Chapter 11 debtor Peekay Boutiques, Inc. is a retailer of lingerie, women’s wellness and sexual health products based in Auburn, Wash. The Chapter 11 case number is 17-11722.

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