Tuesday Morning seeks cash collateral use, proposes interim budget

By Sarah Lizee

Olympia, Wash., May 16 – Tuesday Morning, Inc. filed an emergency motion seeking authorization to use cash collateral on a limited basis, according to documents filed with the U.S. Bankruptcy Court for the Northern District of Texas.

The debtors’ current authority to use cash collateral expires on May 20.

On April 28, the court entered an order approving a transaction between the debtors and Hilco Merchant Resources, LLC.

Hilco will be conducting going-out-of-business sales at the debtors’ stores over the next two months.

As a result, the debtors’ lenders no longer believe the debtor-in-possession budget should govern the company’s cash collateral usage, given that it was premised on operating a going concern rather than a liquidation.

However, the debtors remain obligated to fund certain expenses under the sale order, Tuesday Morning said.

To address their secured lenders’ concerns that the DIP budget provides more authority to use cash collateral than is necessary to meet these obligations, the debtors, in consultation with their advisers, prepared a proposed interim budget.

The purpose of the budget is to bridge the debtors’ authority to use cash collateral until the final hearing on the motion.

The interim budget proposes a maximum amount of $1.02 million for the week ending May 27, and a maximum amount of $632,000 for the week ending June 3, for a total proposed maximum amount during the interim period of about $1.65 million.

Prior to the final hearing, the debtors will file a proposed final wind-down budget to provide for the use of cash collateral until the anticipated conversion of the cases to Chapter 7.

Tuesday Morning is a discount off-price retailer based in Dallas. The company began its second Chapter 11 bankruptcy case on Feb. 14 under case number 23-90001. The previous case started on May 27, 2020 under case number 20-31476. The company exited that round of bankruptcy on Dec. 31, 2020.

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