Cooley Advises Hancock Fabrics, Inc. in Bankruptcy Filing
First Successful Retailer Reorganization Since 2005 Bankruptcy Amendments Expected
NEW YORK, NY--(Marketwire - June 11, 2008) - Hancock Fabrics, Inc., a specialty retailer of
fashion and home decorating textiles, sewing accessories and needlecraft
supplies, announced it has filed a Plan of Reorganization (Plan) under
Chapter 11 of the bankruptcy code with the United States Bankruptcy Court
for the District of Delaware. The filing has the support of its creditors
and equity committees.
Under the Plan, Hancock, which currently operates 270 stores in 37 states
and had sales of $276 million last year, is poised to emerge from Chapter
11 bankruptcy as a stand-alone, fully reorganized entity. General unsecured
creditors will receive cash equal to 104.93% of their claims. Hancock,
which filed for bankruptcy along with its related affiliates on March 21,
2007, is expected to emerge from bankruptcy in August 2008. The
Mississippi-based company has been a public company since 1987. A hearing
is scheduled before Bankruptcy Judge Brendon Shannon next week to set the
date for the hearing on confirmation of Hancock's Plan. Hancock will emerge
with the assistance of new exit financing from GE Capital, as well as
mezzanine financing provided by existing equity holders through a rights
offering of notes and warrants.
"We believe Hancock will be the first retailer to emerge successfully from
bankruptcy as a reorganized entity since the new bankruptcy amendments were
enacted in 2005," said Jay Indyke of Cooley Godward Kronish, who is acting as
lead counsel for the creditors committee. Hancock downsized from
approximately 440 stores at the time of filing to its present configuration
with the help of "creative real estate strategies," as noted by Mr. Indyke.
"This is a very successful case not only because of the extraordinary
recovery creditors are receiving, but also because the company will survive
as an ongoing entity and many employee jobs will be preserved," said Cathy
Hershcopf, also a partner at Cooley working on the engagement.
Other attorneys working on the matter at Cooley with Mr. Indyke and Ms.
Hershcopf are Greg Plotko and Brent Weisenberg.
About Cooley Godward Kronish's Bankruptcy & Restructuring Group
Cooley Godward Kronish's Bankruptcy & Restructuring attorneys bring their
strong business instincts to bear on the wide range of matters related to
restructuring and workouts. Our team has extensive experience representing
creditors and debtors in all aspects of bankruptcy and out-of-court
restructurings. We have handled matters throughout the U.S. and abroad,
across a wide array of industries -- including retail, technology and
manufacturing companies, utilities and multi-national financial
conglomerates. We represent official and unofficial creditors' committees,
debtors, equity committees, employee and retiree committees, tort
committees, secured lenders, investors in distressed situations and
companies and governmental entities in the negotiation of complex
reorganizations.
About Cooley Godward Kronish LLP
Cooley Godward Kronish's 650 attorneys have an entrepreneurial spirit and
deep, substantive experience, and are committed to solving clients' most
challenging legal matters. From small companies with big ideas to
international enterprises with diverse legal needs, Cooley has the breadth
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Contact Information: Media Contact:
Ashley Kanigher
650-843-5721
akanigher@cooley.com