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Daffys 12

Daffys 12

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Published by Chapter 11 Dockets

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Published by: Chapter 11 Dockets on Aug 02, 2012
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US_ACTIVE:\44056071\8\39982.0003
 Debra A. DandeneauWEIL, GOTSHAL & MANGES LLP767 Fifth AvenueNew York, New York 10153Telephone: (212) 310-8000Facsimile: (212) 310-8007Proposed Attorneys for Debtor and Debtor in Possession
UNITED STATES BANKRUPTCY COURTSOUTHERN DISTRICT OF NEW YORK---------------------------------------------------------------x:
 In re
:: Chapter 11DAFFY’S, INC., :: Case No. 12-_____ (__)Debtor. ::---------------------------------------------------------------xMOTION OF THE DEBTOR FOR AN ORDER (I) APPROVINGDEBTOR’S (A) ASSUMPTION OF ASSET PURCHASE, ASSIGNMENT,AND SUPPORT AGREEMENT, (B) ASSUMPTION, ASSIGNMENT,AND SALE OF UNEXPIRED LEASE TO PURCHASER, (C) ENTRYINTO ASSIGNMENT AGREEMENT, AND (D) PAYMENT OF PURCHASERTRANSACTION EXPENSES AND (II) EXTENDING THE TIME TO ASSUMEOR REJECT UNEXPIRED LEASES PURSUANT TO SECTIONS 363 AND 365 OFTHE BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 6004, 6006, AND 9014
TO THE HONORABLE UNITED STATES BANKRUPTCY JUDGE:Daffy’s, Inc., as debtor and debtor in possession (the “
 Debtor
”), hereby moves forentry of an order
 
(a) approving the Debtor’s (i) assumption of that certain Asset Purchase,Assignment, and Support Agreement, dated July 18, 2012, entered into by and among theDebtor, Marcia Wilson, certain other shareholders party thereto, and Jericho Acquisitions I LLC(together with its designees and assigns, the “
 Purchaser
”) and attached to the Assumption Order(as defined herein) as
 Exhibit “1” 
(the “
 Purchase Agreement
”), (ii) assumption, assignment,and sale of the Debtor’s interest in the Herald Square Lease (as defined herein) to the Purchaser
12-13312-mg Doc 12 Filed 08/01/12 Entered 08/01/12 19:31:58 Main DocumentPg 1 of 97
 
2
US_ACTIVE:\44056071\8\39982.0003
 in accordance with the Purchase Agreement, (iii) execution of, and entry into, the Herald SquareAssignment Agreement, substantially in the form attached as Exhibit A to the PurchaseAgreement (the “
 Herald Square Assignment Agreement
”), and (iv) payment of the Purchaser’sTransaction Expenses (as defined herein) as an administrative expense pursuant to section503(b)(1) of title 11 of the United States Code (the “
 Bankruptcy Code
”), and (b) extending thetime within which the Debtor may assume or reject unexpired leases of nonresidential realproperty under section 365(d)(4) of the Bankruptcy Code (the “
 Motion
”). In support of theMotion, the Debtor submits the Declaration of Richard F. Kramer in Support of the Debtor’sChapter 11 Petition and Requests for First Day Relief (the “
 Kramer Declaration
”), filedcontemporaneously herewith, and respectfully represents as follows:
Background
1.
 
On the date hereof (the “
Commencement Date
”), the Debtor commencedwith this Court a voluntary case under chapter 11 of the Bankruptcy Code. The Debtor isauthorized to continue to operate its business and manage its properties as debtor and debtor inpossession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code.2.
 
The Debtor is an off-price retailer of designer fashions for women, men,children, and the home, located in the New York metropolitan area and Philadelphia.For additional background on the Debtor’s business, see the Kramer Declaration.
Jurisdiction
3.
 
This Court has subject matter jurisdiction to consider and determine thismatter pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b).Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.
12-13312-mg Doc 12 Filed 08/01/12 Entered 08/01/12 19:31:58 Main DocumentPg 2 of 97
 
3
US_ACTIVE:\44056071\8\39982.0003
 
Relief Requested
4.
 
Contemporaneously with the filing of this Motion, the Debtor has filed achapter 11 plan (the “
 Plan
”)
1
 
 
that provides for a full recovery to all of the Debtor’s creditors onaccount of their prepetition claims, with interest, as well as a recovery to the holders of equityinterests. The funds to pay such claims will be derived from two primary sources: the sale of theDebtor’s leasehold interests (together with certain other assets) and the liquidation of theDebtor’s inventory. Formulation of a Plan providing for payment in full of all creditors’ claimswas made possible only by the Debtor’s entry into the Purchase Agreement, which provides forthe sale of substantially all of the Debtor’s leasehold interests, as well as certain fixtures andintellectual property, to the Purchaser for a purchase price of $43 million, and the Debtor’s fulland complete disposition of the its inventory pursuant to an Agency Agreement (the “
 Agency Agreement
”) with a joint venture comprised of Gordon Brothers Retail Partners, LLC and HilcoMerchant Resources, LLC (together, the “
 Agent
”).
2
 5.
 
By this Motion, the Debtor requests, pursuant to sections 363 and 365 of the Bankruptcy Code and Rules 2002, 6004, 6006, and 9014 of the Federal Rules of BankruptcyProcedure (the “
 Bankruptcy Rules
”), entry of an order, a form of which is annexed hereto as
 Exhibit “A” 
(the “
 Assumption Order
”), (a) approving the Debtor’s (i) assumption of thePurchase Agreement, (ii) assumption, assignment, and sale of the Debtor’s Herald Square LeaseInterest (as defined herein) free and clear of all liens, claims, encumbrances, and other interests,in accordance with the terms and conditions set forth in the Purchase Agreement, (iii) executionof, and entry into, the Herald Square Assignment Agreement, and (iv) payment of the
1
 
 Debtor’s Plan Under Chapter 11 of the Bankruptcy Code
, dated August 1, 2012.
2
The Debtor intends to file a motion seeking approval of its assumption of the Agency Agreement, storeclosing sale procedures, and certain other related relief.
12-13312-mg Doc 12 Filed 08/01/12 Entered 08/01/12 19:31:58 Main DocumentPg 3 of 97

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