Morris Nichols Recognized for Substantial Contribution to Hancock Fabrics’ Successful Chapter 11 Reorganization
September 2008
Wilmington, DE – September 2, 2008 – The efforts of Morris Nichols’ Business Reorganization and Restructuring group were recognized by Hancock Fabrics, Inc. – one of the only national retailers to emerge successfully from bankruptcy as a reorganized entity since enactment of the new bankruptcy amendments in 2005.
Hancock Fabrics announced on August 1, 2008, that it has emerged from Chapter 11 bankruptcy protection after successfully restructuring its business operations. Jane Aggers, President and CEO, stated, “The rapid and successful restructuring of Hancock Fabrics is a testament to our outstanding associates, supportive suppliers and professional partners, and we appreciate their hard work and dedication throughout this process.”
Morris Nichols served as bankruptcy counsel to the company, assisting with the assumption, assumption and assignment or rejection of approximately 400 retail store leases, the substantial resolution of over $900 million of claims asserted against the company and its affiliated debtors, the settlement of a putative class action regarding certain of the company’s point of sale procedures and, in conjunction with the closing of a $100 million exit financing facility and the issuance of $20 million of secured notes and warrants in a rights offering to certain shareholders of the company, the confirmation of a plan of reorganization that provides for payment in full of all allowed claims plus interest, as applicable.
“Given the wide breadth of financial and operational issues to be addressed by Hancock Fabrics at the time of its bankruptcy filing and the more limited time periods implemented under the 2005 bankruptcy amendments in which to do so, we are pleased that the company was able to reorganize both quickly and in a manner that maximized value for creditors and shareholders,” stated Robert Dehney, a partner at Morris Nichols and practice group leader of the Business Reorganization and Restructuring Group. “In light of the current economic climate for most retailers, including the tightening of the credit markets, this is an excellent result for the company.”