Destination Maternity Corporation, the premier national retailer for maternity apparel and accessories, today announced that it and certain of its subsidiaries have filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
The Company filed to facilitate and continue a marketing process begun in early September that has already yielded indications of interest from several credible bidders.
To help fund and protect its operations during the chapter 11 process, Destination Maternity obtained consent to use cash collateral from all of its prepetition secured lenders. The Company believes that this access to liquidity will be sufficient to pay suppliers and other business partners and vendors for authorized goods and services provided post-filing and during the chapter 11 process.
In connection with that agreement, the Company and its lenders agreed to several milestones related to the chapter 11 cases and marketing process, which call for, among other things, binding bids to be submitted by December 5, 2019, an auction to be held on December 9, 2019, and entry of an order by the Bankruptcy Court approving the sale by December 12, 2019. Parties interested in participating in the marketing process should contact the Company’s investment bank, Greenhill & Co., LLC.
The Company also intends to use the court-supervised process to optimize the Company’s operations, including by right-sizing the Company’s brick-and-mortar store footprint. Destination Maternity is expected to continue to operate and serve its customers, vendors, and partners, and pay its employees in the ordinary course.
“This decision is a difficult, but necessary one,” said Lisa Gavales, Chair of the Office of the CEO of the Company. “In a challenging retail environment, we have had to make some very tough choices, but we are confident that the steps taken today provide an opportunity to continue a marketing process that provides the most efficient means of maximizing value to our stakeholders. Throughout this process we will be focused on developing the promising interest already shown by potential bidders, and maintaining operational momentum toward a stronger business.”
Throughout this process, Destination Maternity, A Pea in the Pod, and Motherhood stores will continue to deliver the high-quality products and services to which its customers are accustomed to both in stores and on-line. Destination Maternity is also filing customary first day motions that, once approved by the Bankruptcy Court, will allow the Company to smoothly transition its business into chapter 11.
Kirkland & Ellis LLP is acting as the Company’s legal counsel, Greenhill & Co., LLC is acting as investment banker and Berkeley Research Group, LLC (“BRG”) is serving as Destination Maternity’s restructuring advisor while BRG’s Robert J. Duffy has been appointed as the Company’s Chief Restructuring Officer.