Wed 08/12/2020 16:39 PM
Relevant Document:
Agenda

Judge Michael Kaplan approved the Sur La Table debtors’ sale of substantially all of their assets to SLT Lending JV, a joint venture of entities affiliated with CSC Generation Holdings Inc. and Marquee Brands LLC, during a hearing today, characterizing the sale as a “tremendous result.” Following a “vibrant” auction and an even more “vibrant” post-auction discussion, as described by Michael Sirota of Cole Schotz, counsel for the debtors, ultimately the official committee of unsecured creditors, the secured lenders and the buyer all agreed on a form of sale order. Sirota said the debtors are in the process of formulating a plan of liquidation that they will discuss with the UCC. The sale is expected to close by next week, or at the very latest Aug. 24.

Sirota recounted that the debtors received two qualified bids - one from SLT Associates LLC, an affiliate of TriArtisan Capital Advisors and Ripple Industries, and the other from successful bidder SLT Lending JV - in addition to the stalking horse bid submitted by the term lender group, with the CSC/Marquee joint venture selected as the auction baseline bid of approximately $77 million based on two separate APAs (for the intellectual property on which the term lender group has a first-priority lien and one with respect to inventory on which a first lien is held by ABL lenders).

After SLT Lending JV disclosed a financial arrangement with the debtors’ controlling shareholder Investcorp, there was a recess during the auction. Sirota described the arrangement as Investcorp agreeing to a limited extent to fund the buyers based on certain draws, or lack thereof, on a letter of credit posted for the benefit of the ABL lender. Ultimately, after the term lender group submitted a full credit bid for the amount of its debt with a value of $86 million and an intermediate bid from TriArtisan, CSC/Marquee submitted the winning bid of $88.9 million along with agreeing to assume no less than 50 leases (an increase of 10 leases from the stalking horse bid).

Due to objections raised about the allocation of the purchase price, language was added to the sale order to provide that no allocation of the purchase price by the purchaser would be binding on the UCC, prepetition ABL or term agents or determinative for any other purpose. Philip Gross of Lowenstein Sandler, counsel to the UCC, noted that the final DIP order carved out certain categories of assets as unencumbered assets, many of which are being sold, and the UCC seeks to make sure its rights are reserved on those issues. Jacob Frumkin of Cole Schotz, for the debtors, said that for the avoidance of doubt, if there is a dispute as to cash distributions, parties reserve all rights.

Justin Bernbrock of Sheppard Mullin, on behalf of the buyer, thanked the debtors’ professionals for their hard work and noted that the purchase contemplates some store closings but that the buyer has not yet designed which stores to close and would like to work with the UCC and the debtors on extending the store closing sale order or other agreed orders on store closings.

John Longmire of Willkie Farr, for Investcorp, said that due to his client’s recusal and other exclusion from internal processes of the debtors, Investcorp did not review the sale order until filed and therefore reserves its rights. Donald Rothman of Riemer & Braunstein, for Wells Fargo as ABL agent, as well as Charles Dale of Proskauer Rose on behalf of the term agent each voiced consent to the transaction.

The debtors submitted the supplemental declaration of Gregory Hagood in support of the sale in advance of the hearing, attaching a transcript of the Aug. 6 auction.
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