Former Ascena seeks supplemental order following voided confirmation

By Sarah Lizee

Olympia, Wash., Jan. 27 – Mahwah Bergen Retail Group, Inc., formerly Ascena Retail Group, Inc., is seeking entry into a supplemental order that would implement the instructions of a federal judge in the U.S. District Court for the Eastern District of Virginia, which recently voided the company’s Chapter 11 plan confirmation.

The company told the U.S. Bankruptcy Court for the Eastern District of Virginia on Wednesday that the supplemental order would avoid substantial costs to the estates and further harm to many third parties who have relied on the fully consummated relief granted in the confirmation order, which was entered on Feb. 25, 2021.

The company said Wednesday that, after the effective date of its plan, which was in March 2021, the lead plaintiffs of a putative securities class action and the U.S. trustee overseeing the case appealed the confirmation order; specifically, challenging the third-party release and exculpation provisions contained the plan. The appeal proceeded for 10 months.

Ultimately, the district court vacated the third-party release and exculpation provisions. However, the district court said it didn’t seek to undo any transactions that have occurred in the plan’s undertaking, nor did it require the bankruptcy court to “unwind” the plan.

The company said the supplemental order seeks the following relief:

• Deeming the plan confirmed and effective as of the original confirmation date and original effective date, respectively;

• Severing the relevant third-party release provision from the plan and confirmation order;

• Modifying the term “exculpated parties” to be limited to estate fiduciaries and the exculpation provision of the confirmation order to include a gatekeeper provision;

• Adopting the record established at the confirmation hearing, the findings of fact made by the bankruptcy court in the confirmation order and confirmation memorandum opinion, as modified and supplemented by the findings of fact made by the district court in the remand opinion; and

• Authorizing and ratifying all actions taken by the debtors, the reorganized debtors, the plan administrator, or the general unsecured creditor trustee that are or were necessary or appropriate to implement the plan.

A hearing on the motion is scheduled for March 3.

Ascena was a Mahwah, N.J.-based specialty retailer offering clothing, shoes and accessories for misses and plus-size women. The company made a pre-packaged Chapter 11 bankruptcy filing on July 23, 2020 under case number 20-33113.

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