Shoes for Crews files bankruptcy, lines up $30 million new-money DIP

By Sarah Lizee

Olympia, Wash., April 2 – Shoes for Crews, LLC and several affiliates filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the District of Delaware.

Chief financial officer Christopher Sim said in court documents that the footwear manufacturing company has been under significant pressure from adverse macro-trends, compounded by the Covid-19 pandemic.

More recently, the debtors have faced extreme inflationary pressure on the costs of goods and labor, he added.

The debtors retained Ropes & Gray LLP as restructuring legal counsel and Solomon Partners Securities, LLC as investment banker in mid-2023 to explore strategic alternatives, including a sale to a third-party buyer and a debt-for-equity exchange. The company also retained Berkeley Research Group, LLC as financial adviser.

In the months leading up to the filing, the debtors engaged with their secured creditors with the goal of developing a strategic transaction that would de-lever their balance sheet and provide incremental liquidity to fund operations.

The company’s prepetition capital structure includes a $282.2 million first-lien credit facility, a $20.8 million sidecar credit facility, a $147.3 million second-lien credit facility, a $19.9 million Irish credit facility and an $8.2 million CIT factoring facility.

The debtors have also been soliciting bids for substantially all of their assets, both from third parties and their existing secured lenders.

Now, the company is working to finalize terms of a credit bid from first-lien lenders for the debtors’ operations as a going concern. The company said it hopes to file bid procedures within the next five days.

The debtors have also secured $30 million super-priority priming senior secured multiple draw term loan debtor-in-possession facility to ensure continued operations in the ordinary course pending the outcome of the sales process. The company is seeking interim access to $20 million of the facility.

Following a final order, the facility will also include a rollup of $83.83 million of prepetition first-lien loans and $6.17 million of prepetition sidecar credit agreement loans.

Antares Capital LP is the administrative agent and collateral agent for the DIP facility, which is set to mature in 150 days.

Interest for new-money DIP loans will be SOFR plus 600 basis points, and interest for rollup loans will be SOFR plus 800 bps.

There is a 5% commitment fee and a 2% unused commitment fee on new money. There is also a $250,000 fronting fee and $50,000 in administrative agency fees.

The company is also seeking to access the cash collateral of its lenders.

In its petition, the company reported $100 million to $500 million in assets and $500 million to $1 billion in liabilities.

The largest unsecured claims are grom CEVA Logistics US Inc., based in Houston, with an $8.2 million freight and logistics claim; Hyper Shien Group Shoes Co., Ltd., based in Hong Kong, with a $2.25 million contingent claim; Wjiang Jinjiang Xiong Yi Shoes, based in Hong Kong, with a $2.08 million manufacturer claim; Vandegrift, based in Clark, N.J., with a $1.49 million freight and logistics claim; and New Balance Athletic Shoe Inc., based in Knoxville, Tenn., with a $1.46 million manufacturer claim.

The Boca Raton, Fla.-based company filed bankruptcy under Chapter 11 case number 24-10663.

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