Bluestem Brands requests court approval of global dispute settlement

By Caroline Salls

Pittsburgh, July 13 – Bluestem Brands, Inc. requested court approval of a global settlement that resolved disputes with its asset purchaser, its official committee of unsecured creditors, its pre-bankruptcy term loan agent and parent Bluestem Group, Inc. (BGI), according to a motion filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Under the settlement, the buyer has agreed to backstop up to $1 million in administrative and priority claims, as well as to provide up to $1 million in cash for distribution to holders of general unsecured claims as a part of the general unsecured claims recovery.

Any excess cash from the administrative and priority claims backstop amount will be contributed to the general unsecured claims recovery.

BGI has consented to the buyer remaining in the IDC following confirmation of the plan to provide the Bluestem debtors and buyer increased flexibility.

BGI has agreed to waive any recovery on account of its general unsecured claims, including any rejection damages claims, which the motion said could otherwise exceed $50 million.

The term lenders have also agreed to waive any recovery from a general unsecured claims settlement payment on account of their term loan deficiency claim.

BGI has agreed to cooperate with the Bluestem Group debtors regarding specified tax matters.

Also under the settlement, Bluestem said all preference claims will be released and waived, and a substantial number of jobs will be preserved by facilitating a smooth going-concern sale closing.

Bluestem is an Eden Prairie, Minn.-based online retailer of a broad selection of name brand and private label general merchandise. The company filed bankruptcy on March 9 under Chapter 11 case number 20-10566.

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