WILMINGTON, Del. — A bankruptcy judge has approved a Nov. 15 confirmation hearing for Peekay Boutique’s Chapter 11 disclosure and plan, a fast-tracked process that was formed around a $30.7 million sale to senior lenders.
Peekay, with 46 retail locations as well as its online operations, filed for bankruptcy protection in August, listing more than $72.6 million in debt.
Peekay was forced into bankruptcy after transitioning from a mom-and-pop-owned retailer into a heavily leveraged, investor-owned chain.
According to Albert Altro, Peekay’s recently appointed chief restructuring officer, the Chapter 11 filing for bankruptcy protection capped years of unsuccessful restructuring and sale efforts, including an attempted initial public stock offering and tentative sale agreements.
Under four banners — Lovers, Christals, ConRev and A Touch of Romance — the company operates the bulk of its stores nationwide, particularly in Washington state and Oregon. It also has affiliated ZJ Gifts stores in Texas, Colorado and Oklahoma.
Peekay’s senior lenders agreed to acquire the company as a stalking horse if no other offers arrived. Last week, no other offers were submitted and a planned auction was canceled.
“This was not a loan-to-own scenario by any stretch,” Peekay attorney Adam G. Landis, of Landis Rath & Cobb, told Law360. “They were somewhat of a reluctant buyer. From the company’s perspective, we were very glad to have a floor price with very few barriers to entry.”
Senior lenders, according to a confirmation schedule, would begin voting on the plan immediately with a Nov. 10 deadline, just five days before the confirmation hearing.
Under a settlement announced last month, holders of the Term A senior-most loans agreed to submit a credit bid purchase offer that would cancel $30 million of their current $35.5 million loan claim, according to Law360.
The lenders further agreed to provide an unsecured note up to $200,000, payable over four years, to unsecured creditors, as well as a $100,000, four-year note to the company. The lenders also would assume liability for $400,000 worth of outstanding gift cards.
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