CACHÉ, Inc., a national omni-channel specialty retailer of women's apparel and accessories, announced that it has filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the Bankruptcy Court ("Court) for the district of Delaware in Wilmington. The company intends to continue to operate its business in the ordinary course during this time. To fund operations during the proceeding, the Company has received a commitment for up to $22 million in debtor-in-possession ("DIP") financing from Salus Capital Partners, LLC. The DIP facility is subject to Court approval.
"We took this action today with the goal of securing CACHÉ's future," said Jay Margolis, CACHÉ Chairman and CEO. "Our team has been working tirelessly to implement a turnaround. In a short period of time, we upgraded key stores and closed unprofitable ones; launched a more vibrant and robust e-commerce site where conversion has doubled; and have seen same store comp sales from our 2014 Holiday season increase 9.5%, with this positive momentum continuing through January. However, the depressed brick and mortar retail market, the continued growth of online shopping, and rapidly changing consumer tastes and habits thwarted our efforts. Ultimately, we have not had the time or capital to realize all of the benefits of our hard work."
As part of these proceedings, the company intends to further reduce its store count and sell and renegotiate certain of its leases. In addition, as part of its contingency planning, the company and its representatives have sought proposals from experienced liquidators to serve as a stalking horse purchaser of the company's assets. As CACHÉ is working toward a going-concern outcome, the stalking horse agreement would be subject to potential higher and/or better bids, and most importantly, potential going-concern bids, at a bankruptcy auction.
"We believe that this action provides CACHÉ the greatest opportunity to secure a strategic partner while maximizing recovery to our stakeholders," added Margolis.
As is customary, the company is seeking authority from the Court to pay wages and salaries, continue employee benefit programs, pay vendors on an ongoing basis, and honor customer programs.
On January 27, 2015, CACHÉ received a letter from NASDAQ informing the Company that delisting procedures have been commenced. The company does not intend to appeal the NASDAQ determination. Moreover, it is anticipated that CACHÉ's assets will be insufficient to satisfy all of its obligations to creditors. Accordingly, as provided under applicable law, it is expected that no distributions will be made to holders of the Company's common stock.
Pachulski Stang Ziehl & Jones LLP is serving as the Company's legal advisors, FTI Consulting, Inc. as its financial advisor, Janney Montgomery Scott LLC as its investment bank, and A&G Realty Partners, LLC as its real property advisors.