Tuesday Morning finally reaches global settlement with creditors

By Sarah Lizee

Olympia, Wash., July 25 – Tuesday Morning, Inc. said it has finally reached a settlement and release agreement with several parties that resolves several creditor disputes and provides agreements on distribution of its remaining assets, according to a motion filed with the U.S. Bankruptcy Court for the Northern District of Texas.

The parties to the settlement include the official committee of unsecured creditors, term loan lenders, debtor-in-possession lender Invictus Global Management, LLC and DIP agent Cantor Fitzgerald Securities, among others.

“The compromises in the settlement agreement integrate a multitude of complex agreements that are inextricably intertwined,” the company said in the motion.

“As the court has observed, these are difficult issues and the parties understand that there is no way to cherry pick which fights to pursue without being dragged into all of the rest.”

The parties are seeking to settle their competing secured claims and lien disputes on a collective, global basis without incurring any further litigation expense.

Among other things, the agreement includes a settlement of the TASCR parties’ claims (excluding the JSC note claims) at $9.5 million and the process for recovery, including an initial cash payment of $8.5 million.

It also provides for a settlement of the Invictus parties’ claims at $25 million (which had been asserted at about $50.8 million) and the process for recovery, including 52.5% of both (a) the current remaining cash after the TASCR cash payment and (b) the future cash.

There is also a settlement of the term lender parties’ claims at $18 million and the process for recovery, including 47.5% of both (a) the current remaining cash after the TASCR cash payment and (b) the future cash.

It also provides for a settlement and waterfall allocation of net litigation recoveries between the TASCR parties, the Invictus parties, the term lender parties and the estates.

“The settlement agreement embodies the best chance at a near-global settlement and smooth transition into Chapter 7 where a Chapter 7 trustee can be appointed to pursue certain valuable causes of action for the benefit of the estates without the time and expense of wading through a quagmire of long-standing creditor disputes over their respective rights and claims to the assets of the estates,” the company said.

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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