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Cottonwood Financial files bankruptcy, eyes going-concern sale
By Sarah Lizee
Olympia, Wash., Feb. 26 – Cottonwood Financial Ltd., which operates under the name Cash Store, and four affiliates filed Chapter 11 bankruptcy on Sunday in the U.S. Bankruptcy Court for the Northern District of Texas.
Karen Nicolaou, chief restructuring officer of the company, said in court documents that the company remains in a strong operational position but is in default under a $26.74 million secured loan due 2025 with lenders Third Coast Bank, SSB and MS Facilities LLC, which was accelerated before the petition date.
The company had failed to make the scheduled principal and interest payments due on Dec. 9 under the loan.
Cottonwood also has a $25 million subordinated loan held by Bomani Business Lending, LLC.
The CRO said Cottonwood worked with Third Coast Bank and MS Facilities while exploring strategic alternatives such as a sale, recapitalization or alternative sources for refinancing. Ultimately the company decided that a 363 sale process would be the best path forward.
Cottonwood has filed bid procedures with hopes to complete a sale within 90 days.
The company is seeking approval to choose a stalking horse bidder and offer bid protections that would include a 3% breakup fee and a $250,000 expense reimbursement.
The competing bid deadline would be 5 p.m. ET on April 25, an auction would be held on April 29 and a sale hearing would take place on May 10.
In its petition, the company reported up to $50,000 in assets and $50 million to $100 million in liabilities.
No unsecured creditors were listed with claims of $1 million or more.
Gray Reed is the debtors’ proposed counsel, Harney Partners is financial adviser and Oppenheimer & Co. Inc. is investment banker.
Cottonwood Financial is one of the largest privately held retail consumer finance companies in the United States. The Chapter 11 case number is 24-80035.
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