EToys Direct 1, LLC, et al., filed a voluntary petition for relief under chapter 11 of Title 11 of the Bankruptcy Code on December 28,2008. On January 16,2009, pursuant to a motion filed by The Debtors. Etoys subsequently filed a petition with the United States Bankruptcy Court for the district of delaware.
EToys Direct 1, LLC, et al., filed a voluntary petition for relief under chapter 11 of Title 11 of the Bankruptcy Code on December 28,2008. On January 16,2009, pursuant to a motion filed by The Debtors. Etoys subsequently filed a petition with the United States Bankruptcy Court for the district of delaware.
EToys Direct 1, LLC, et al., filed a voluntary petition for relief under chapter 11 of Title 11 of the Bankruptcy Code on December 28,2008. On January 16,2009, pursuant to a motion filed by The Debtors. Etoys subsequently filed a petition with the United States Bankruptcy Court for the district of delaware.
In re: eTOYS DIRECT 1, LLC, et al., 1 ) Chapter 11 ) ) Case No. 08-13412-BS ) (Jointly Administered) ) Debtors. ) Re: Docket No. 143 General Objections to Approval of Sale: January 30, 2009, at 5:00p.m. (EST) Deadline for Submitting Bids: February 2, 2009, at 5:00p.m. (EST) Deadline for Objections to Cure Costs: February 3, 2009, at 4:00p.m. (EST) Auction Date: February 4, 2009, at 10:00 a.m. (EST) Deadline for Objections to Debtors' Auction Conduct: February 5, 2009, at 12:00 noon (EST) Deadline for Objections to Assumption and Assignment: February 5, 2009, at 4:00p.m. (EST) Hearing Date on Approval of Sale: February 6, 2009, at 9:00a.m. (EST) NOTICE OF AUCTION AND SALE HEARING PURSUANT TO ORDER (A) APPROVING SALE PROCEDURES AND BID PROTECTIONS, INCLUDING BREAK-UP FEE(S), IN CONNECTION WITH SALE OF SUBSTANTIALLY ALL ASSETS; (B) SCHEDULING AN AUCTION FOR AND HEARING TO APPROVE ONE OR MORE SALES; (C) APPROVING NOTICE OF RESPECTIVE DATE, TIME AND PLACE FOR AUCTION AND FOR HEARING ON APPROVAL OF SALE(S) PLEASE TAKE NOTICE THAT on December 28,2008, eToys Direct 1, LLC, et al., the above-captioned debtors and debtors-in-possession (collectively, the "Debtors"), each filed a voluntary petition for relief under chapter 11 of Title 11 of the Bankruptcy Code. PLEASE TAKE FURTHER NOTICE THAT on January 16,2009, pursuant to a motion filed by the Debtors dated January 2, 2009 (the "Motion"), 2 the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") entered an Order (A) Approving Sale Procedures and Bid Protections, Including Break-Up Fee(s), in Connection With Sale of Substantially All Assets; (B) Scheduling an Auction for and Hearing to Approve One or More Sales; (C) Approving Notice of Respective Date, Time and Place For Auction and for Hearing on Approval OfSale(s) (the "Sale Procedures Order") approving the Sale Procedures annexed hereto as Exhibit 1. 1 The Debtors in these cases, along with the last four digits of each Debtors' federal tax identification number, if applicable, are: eToys Direct 1, LLC (N/A); The Parent Company (7093); BabyUniverse, Inc. (7990); Dreamtime Baby, Inc. (8047); eToys Direct, Inc. (7296); PoshTots, Inc. (8660); eToys Direct 2, LLC (N/A); eToys Direct 3, LLC (N/A); Gift Acquisition, L.L.C. (0297); and My Twinn, Inc. (1842). The address for each of the Debtors is 717 17th Street, Suite 1300, Denver, CO 80202, with the exception of Posh Tots, Inc., the address for which is 5500 Cox Road, Suite M, Glenn Allen, VA 23060. Unless otherwise defined, capitalized terms used herein have the meaning ascribed to them in the Motion. 2 Capitalized terms used in this Notice but not defined shall have the meanings given to them in the Motion. 68781-001\DOCS_DE: 144013.7 PLEASE TAKE FURTHER NOTICE that the Debtors will deliver a copy of the Sale Procedures Order and/or the Motion to you by facsimile, e-mail, or overnight delivery if you fax a written request for such delivery to Michael R. Seidl, Esquire, at Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 1 th Floor, Wilmington, Delaware 19801, facsimile number 302-652-4400 or request a copy by e-mail to mseidl@pszilaw.com. Such request must specify how the information is to be transmitted. PLEASE TAKE FURTHER NOTICE that the Debtors will seek entry of a second order (the "Sale Order") at a hearing to be held on February 6, 2009, at 9:00a.m. (EST) (the "Sale Hearing") to, among other things, (a) authorize the Debtors to sell substantially all Assets, free and clear of liens, claims, and encumbrances, (b) consider and approve the transaction(s) contemplated by the Successful Bid(s) selected by the Debtors at the Auction, and (c) assume and assign executory contracts and unexpired leases of nonresidential real property. The Sale Hearing may be adjourned from time to time without further notice except by announcement of the adjourned date or dates at the hearing or any adjournment thereof. PLEASE TAKE FURTHER NOTICE THAT, in accordance with the Sale Procedures, among other things, (a) interested parties will have the opportunity to make competing offers to either purchase, or consummate some other transaction with respect to all or a portion of the assets of the Debtors or to serve as the Debtors' liquidation agent, and (b) the Debtors will select the highest or best bid(s) and seek approval from the Bankruptcy Court of the entity submitting such bid(s). The Sale Procedures should be reviewed carefully as they contain detailed requirements for the submission of all bids and the conduct of the Auction. PLEASE TAKE FURTHER NOTICE THAT, pursuant to the Sale Procedures, the Auction will be conducted at the offices ofPachulski Stang Ziehl & Jones LLP, 919 North Market Street, 17th Floor, Wilmington, DE 19899, commencing on February 4, 2009, at 10:00 a.m. (EST). The Auction may be adjourned from time to time without further notice except by announcement of the adjourned date or dates at the Auction or any adjournment thereof. PLEASE TAKE FURTHER NOTICE THAT objections to the sale of the Assets on the terms requested in the Motion shall be set forth in writing and shall specify with particularity the grounds for such objections or other statements of position and shall be electronically filed with the Court on or before January 30, 2009, at 5:00p.m. (EST), and shall be served so as to be received by that same date and time on ((a) counsel to the Debtors - (i) Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Blvd., Suite 1100, Los Angeles, CA 90067, Attn: Jeffrey W. Dulberg, Esq., fax (310) 201-0760, e-mail: jdulberg@pszjlaw.com, and (ii) Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 1 ih Floor, P.O. Box 8705, Wilmington, DE 19899-8705, Attn: Laura Davis Jones, Esq., fax (302) 652-4400, e-mail: ljones@pszjlaw.com; (b) counsel to the Lender- (i) Klee, Tuchin, Bogdanoff & Stem LLP, 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA 90067, Attn: Michael L. Tuchin, Esq., fax (310) 407-9090, e-mail: mtuchin@ktbslaw.com, and (ii) Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, DE 19801, Attn: Daniel J. DeFranceschi, Esq., fax (302) 651-7701, e-mail: 68781-00I\DOCS_DE:l44013.7 2 defranceschi@RLF.com; (c) counsel to the Committee, (i) Arent Fox LLP, 1675 Broadway, New York, NY 10019, Attn: Schuyler G. Carroll, Esq., fax (212) 484-3990, e-mail: carroll.schuyler@arentfox.com, and (ii) Elliott Greenleaf, 1000 West Street, Suite 1440, Wilmington, DE 19801, Attn: Rafael X. Zahralddin-Aravena, Esq., fax (302) 384-9399, e- mail: rxza@elliottgreenleaf.com; and (d) the Office ofthe United States Trustee, J. Caleb Boggs Federal Building, 844 King Street, Suite 2207, Wilmington, DE 19801, Attn: David Buchbinder, Esq., fax (302) 573-6497, e-mail: David.L.Buchbinder@usdoj.gov; provided, however, that parties may file and serve objections to any matters relating to the conducting of the Auction, including, but not limited to, the Debtors' determinations of which bid was a Qualified Bid, which bid was the Successful Bid or the manner in which the Auction was conducted, on or before 12:00 noon (EST) on February 5, 2009. PLEASE TAKE FURTHER NOTICE that the failure of any person or entity, other than the Lender and the Debtors' pre-petition lenders, to timely file its objection shall be a bar to the assertion at the Sale Hearing or thereafter, of any objection to approval of the sale to the Successful Bidder(s) on such terms, or consummation and performance of the purchase agreement with the Successful Bidder(s), including the transfer of the Assets free and clear of all Interests pursuant to section 365(f) of the Bankruptcy Code, any good faith finding with respect to the Successful Bidder(s) under section 363(m), and the sale of the Assignable Contracts and Leases and the Intellectual Property, and the exercise of those rights by the Successful Bidder(s) under section 365 ofthe Bankruptcy Code, and shall be deemed a consent to such transfer, if authorized by the Court. PLEASE TAKE FURTHER NOTICE that this Auction and Sale Hearing Notice is subject to the full terms and conditions of the Motion, Sale Procedures Order and Sale Procedures which shall control in the event of any conflict and the Debtors encourage parties in interest to review such documents in their entirety, which are available upon written request from undersigned counsel. Dated: January 2Q., 2009 68781-001\DOCS_DE: 144013.7 ~ ~ Jeffrey W. Dulberg (CA Bar No. 181200) Michael R. Seidl (Bar No. 3889) 919 N. Market Street, 17th Floor Wilmington, DE 19801 Telephone: 302/652-4100 Facsimile: 302/652-4400 Email: ljones@pszjlaw.com jdulberg@pszjlaw.com mseidl@pszjlaw.com [Proposed] Counsel for eToys Direct 1, LLC, et al., Debtors and Debtors in Possession 3 EXHIBIT 1 Sale And Bid Procedures* a. The Assets shall be sold free and clear of all liens, claims and encumbrances, other than any liabilities for future performance under Assignable Contracts and Leases, in accordance with section 363(b) & (t) and section 365 of the Bankruptcy Code, with all then- existing liens, claims, and encumbrances (collectively "Interests") (i) to attach to the net proceeds of the sale of the Assets with the same validity and priority as existed prior to the sale (the Lender to be paid in cash at closing) or (ii) to be paid in full. b. The Debtors will provide parties interested in acquiring the Assets ("Potential Purchasers") with reasonable access to their books, records, facilities, key personnel, officers, independent accoWltants and legal COWlsel for the purpose of conducting due diligence. The Debtors shall not be required to provide confidential or proprietary information to a Potential Purchaser if the Debtors (after consultation with the Lender) reasonably believe that such disclosure would be detrimental to the interests of the Debtors. Prior to being permitted to conduct any due diligence, a Potential Purchaser may be required to execute a non-disclosure agreement in fonn and substance satisfactory to the Debtors. c. Bids will be accepted for the purchase of the Assets as a going concern, or other transaction respecting the Assets, or to act as liquidation agent to the Debtors. Bids may be for all or a portion of the Assets. Bids must be in writing and must be submitted so that they are actua1ly received by (a) counsel to the Debtors- (i) Pachulski Stang Ziehl & Jones LLP, 10100 Santa Monica Blvd., Suite 1100, Los Angeles, CA 90067, Attn: Jeffrey W. Dulberg, Esq . fax (310) 201-0760, e-mail: jdulberg@pszjlaw.com, and (ii) Pachulski Stang Ziehl & Jones LLP, 919 North Market Street, 17th Floor, P.O. Box 8705, Wilmington, DE 198998705, Attn: Laura Davis Jones, Esq., fax (302) 652A400, e-mail: ljones@pszjlaw.com; (b) counsel to the Lender- (i) Klee, Tuchin, Bogdanoff & Stern LLP, 1999 Avenue of the Stars, 39th Floor, Los Angeles, CA 90067, Attn: Michael L. Tuchin, Esq., fax (310) 407-9090, e-mail: mtuchin@ktbslaw.com, and (ii) Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street, Wilmington, DE 19801, Attn: Daniel J. DeFranceschi, Esq., fax (302) 651-7701, e-mail: defranceschi@RLF.com; and (c) counsel to the Committee- (i) Arent Fox LLP, 1675 Broadway, New York, NY 10019, Attn: Schuyler G. Carroll, Esq., fax (212) 484-3990, e-mail: carroll.schuyler@arentfox.com, and (ii) Elliott Greenleaf, 1000 West Street, Suite 1440, Wilmington, DE 19801, Attn: Rafael X. Zahralddin-Aravena, Esq., fax (302) 384-9399, e-mail: rxza@elliottgreenleaf.com by no later than 5:00p.m. (EST), on February 2, 2009. d. Bids shall (1) include an executed purchase agreement (a "Purchase Agreement") and/or an executed agency agreement standard tor use by liquidators in the industry (an '"Agency Agreement"); Capitalized tenns used herein that are not otherwise defined have the meaning ascribed to them in the Debtors' Sale Procedures I Sale Approval Motion filed January 2, 2009, and which will be made available upon written request made to Debtors' counsel. 68781-001\DOCS_OE;\440\j,) (2) provide that the bidding Potential Purchaser (each a "Bidder'') is prepared to enter into and consummate the transaction upon the entry of the Sale Order; (3) not be subject to, or conditioned on, and not contain any material contingencies to the validity, effectiveness, and/or binding nature of the bid, including, without limitation, contingencies for financing, due diligence, or (4) state that such Bidder is prepared to abide by the Sale Procedures; and (5) provide that the purchase price shall be paid in full in cash or immediately available funds at closing. (e) A bid shall also be accompanied by a deposit in the amount often percent (10%) of the purchase price, in the fonn of a bank wire (instructions to be provided) or bank check (made out to "Pachulski Stang Ziehl & Jones, LLP Trust Account for the benefit of The Parent Co.'') (the "Deposit"). In addition, a bid must contain information, acceptable to the Debtors and the Lender, in consultation with the Committee, which demonstrates that the Bidder (i) has sufficient cash on hand or a binding financial commitment from an established and financially sound financial institution to ensure such Bidder's ability to meet its commitments purSuant to its bid and to close the transaction within the time frame established, and (ii) has the legal capacity to complete the Sale. (f) A bid must also be accompanied by sufficient indicia that the person submitting the bid is legally empoweredt by power of attorney or otherwise, and financially capable to (i) bid on behalf of the Bidder, and (ii) complete and sign, on behalf of the Bidder, a binding and enforceable asset purchase agreement. (g) The Debtors and the Lender, in consultation with the Committee, shall detennine whether a bid has satjsfied all the conditions set forth above. Any bid that satisfies such conditions shall be deemed a "Qualified Bid" and the maker of such bid, a "Qualified Bidder,., (h) The Auction will be conducted at the offices of Pachulski Stang Ziehl & Jones LLP, 919 N. Market Street, 17th Floor, Wilmington, DE 19899, or at another location as may be timely disclosed by the Debtors to Qualified Bidders, on February 4, 2009, at 10:00 a.m. (EST) (the "Auction Date"). Only Qualified Bidders, the Debtors, the Lender, and the Committee will be permitted to participate in and/or make any statements on the record at the Auction. All Qualified Bidders must appear in person at the Auction, or through a duly authorized representative. If multiple Qualifying Bids satisfYing all Auction requirements are received, each such Qualified Bidder shall have the right to continue to improve its bid at the Auction. The Auction will be an 'open format' such that all participants are contemporaneously to be made aware of the particulars of any Qualified Bids that are submitted. The Debtors reserve the right, in consultation with the Lender and the Committee, to (i) auction the Assets in one or more lots, (ii) impose additional tenns and conditions at or prior to the Auction, including, but not limited to, extending the deadlines set forth in the Sale Procedures, (iii) adjourn or cancel the Auction at any time without further notice and/or seek to move forward with a private sale, and 68781-00I\DOCS_OE;I44013.5 2 (iv) reject any or all Qualified Bids that, in the Debtors' reasonable business judgment, after consultation with the Lender. are not for a fair and adequate price or the acceptance of which would otherwise not be in the best interests of the estates. (i) The Debtors may conduct the Auction in all respects in the manner that the Debtors, in consultation with the Lender and the Committee. detennine will result in the highest, best or otherwise financially superior offer(s) for the Assets provided that such manner is not inconsistent with the provisions of the Bankruptcy Code. At the conclusion of the Auction, and subject to Bankruptcy Court approval following the Auction, the successful Qualified Bid(s) shall be selected by the Debtors in consultation with the Lender and the Committee (the "Successful Bid(s)"). (j) Promptly following the conclusion of the Auction, the Successful Bidder(s), consisting of the entity that made a Successful Bid(s), or the entities that together made the Successful Bids, shall complete and sign all agreements, contracts, instruments or other documents evidencing and containing the terms and conditions upon which such bid was made. Promptly following the conclusion of the Auction, the Debtors shall cause to be posted upon the web site of their claims agent, www.omnimgt.com/etoys, the results ofthe Auctiont the identity of any Successful Bidder(s), and information provided by any Successful Bidder(s) as adequate assurance of future performance within the meaning of 11 U.S.C. 365(f)(2)(B) of any Assignable Contracts and Leases to be assumed and assigned to such Successful Bidder(s). (k) The second highest bidder(s) for the Assets (including, if applicable, the high bidder for any portion thereof) may be required by the Debtors to sign such agreements, contracts, instruments or other docwnentsfor such bid(s) as back-up bid(s) open for 15 days pending closing with the Successful Bidder(s). If closing with the Successful Bidder(s) is not completed within 15 days of Bankruptcy Court approval of the Auction, then the Debtors, in consultation with the Lender and the Committee, may elect to sell to such second hirest back- up bidder(s), who will be obligated to complete the closing of its purchase by the 10 day following its selection by the Debtors (with the consent of the Lender) as the new Successful Bidder. (1) The Debtors intend to solicit "stalking horse" bids for the Assets prior to the Auction. Recognizing a Stalking Horse Bidder's expenditure of time, energy and resources, and that the stalking horse provides a floor bid with respect to the Assets that it offers to purchase, the Debtors propose to provide certain bidding protections to those Potential Purchasers, if any, selected as stalking horse bidders (each a "Stalking Horse Bidder") by the Debtors in their sole discretion, in consultation with the Lender and the Committee, subject to further approval and order of the Bankruptcy Court. (m) The Debtors may agree to pay a Stalking Horse Bidder a break-up fee in the amount ofup to 3.0% of the purchase price offered by such Stalking Horse Bidder, in cash or other immediately available good funds in the event that: (i). the Stalking Horse Bidder is not approved by the Bankruptcy Court as the purchaser of the Assets on which it bid (ii) the Stalking Horse Bidder is not in default of its obligations under the purchase agreement with it and (iii) the Assets on which it bid are thereafter sold to a Successful Bidder(s) at the Auction for 68781 ..QOI\DOCS_DE:l44()JJ.S 3 consideration in excess of the purchase price provided for in the purchase agreement with the Stalking Horse Bidder notwithstanding the Stalking Horse willingness and ability to consummate the transactions contemplated by the purchase agreement, which payment shall be made to the Stalking Horse Bidder promptly following closing with the Successful Purchaser(s) of the Assets on which the Stalking Horse Bidder bid (the "Break-Up Fee"); provided that in no event shall any Break-Up Fee be paid to any Stalking Horse Bidder absent further order of the Bankruptcy Court. (n) In the event a Stalking Horse Bidder is designated and approved by the Bankruptcy Court, any bid(s) submitted by a party or parties other than the Stalking Horse Bidder must be in an amount that is sufficient to pay the Break-Up Fee and result in additional consideration to the Debtors' estates (as compared to the purchase price offered by such Stalking Horse Bidder), after payment of the Break-Up Fee, in an amount determined by the Debtors, in consultation with the Lender and the Committee. in their sole and absolute discretion. Such amount may include an initial minimum bid increment and the Debtors may require subsequent minimum bid increments for any further bids. (o) The Sale Hearing will be held before the Honorable Brendan L. Shannon, United States Bankruptcy Judge, on February 6, 2009, at 9:00a.m. (EST) or at such time thereafter as counsel may be heard. The Sale(s) of the Assets will be subject to, among other things, the entry of the Sale Order by the Bankruptcy Court approving the Sale(s). The Sale Hearing may be adjourned from time to time without further notice to creditors or parties in interest other than by announcement of the adjoununent in open court or on the Bankruptcy Court's calendar on the date scheduled for the Sale Hearing or any adjourned date. (p) Deposits of all Qualified Bidders shall be held until the third day after the Sale Order is entered, after which time the Deposits of the non-Successful Bidder(s) other than those of the back-up bidder(s) shall be returned. If the Successful Bidder(s) fail to consummate a Bankruptcy Court-approved Sale because of a material breach or failure to perfonn on the part of such Successful Bidder(s), the Debtors shall be entitled to retain the Deposit(s) of each Successful Bidder, in addition to any other legal or equitable remedies that may be available under applicable law. (q) The closing shall take place at the offices ofPachulski Stang Ziehl & Jones, LLP, 919 N. Market Street, 17th Floor, Wilmington, DEl 9899 on or before February 13, 2009 (the uoutside Date"). In the event the conditions to closing set forth in any Agreement executed by the Debtors and a Successful Bidder have not been satisfied or waived by the Outside Date, then any party who is not in default may terminate the Agreement. Alternatively, the parties may, subject to the consent of the Lender, mutually agree to an extended Closing Date. Until any Agrer:ment is either terminated or the parties have agreed upon an extended Closing the parties shall diligently continue to work to satisfy ali- conditions to Closing and the transaction contemplated therein shall close as soon as such conditions are satisfied or waived. 6878l..QOl\DOCS_DE:I440l3.5 4