Christopher & Banks store-closing sales, cash collateral use approved

By Sarah Lizee

Olympia, Wash., Feb. 9 – Christopher & Banks Corp. received final court approval to conduct a store-liquidating sale process and access the cash collateral of its pre-bankruptcy term loan lenders and administrative agent ALCC, LLC, according to orders filed Monday with the U.S. Bankruptcy Court for the District of New Jersey.

The sales will take place through the company’s brick-and-mortar stores and ecommerce platform and are set to conclude on Feb. 28.

As previously reported, the store-closing sales had drawn an objection from Regions 3 and 9 U.S. trustee Andrew R. Vara, who said that there is potentially a conflict of interest with Hilco Merchant Resources, LLC as liquidator.

Hilco is an affiliate of the debtors’ pre-petition secured lenders, ReStore Capital, LLC and ALCC. As such, Hilco has an interest in maximizing the lenders’ recovery on the approximate combined $14 million in pre-petition debt owed by the debtors.

“Hilco may be motivated to ensure its affiliates fully recover with the least amount of risk, rather than maximizing the return to all creditors,” the U.S. trustee had said.

Further, ALCC is the stalking horse bidder under an asset purchase agreement with the debtors.

“As Hilco has the exclusive rights to conduct the going out of business sales, its affiliate should not later be permitted to bid on the purchase of residual inventory or any other asset,” Vara said.

“Retaining a liquidator affiliated with the pre-petition secured lenders and the stalking horse bidder presents an actual conflict of interest and is fundamentally at odds with the debtors’ fiduciary duty to protect and preserve the estate.”

Christopher & Banks is a Minneapolis-based specialty retailer featuring privately branded women’s apparel and accessories. The company filed Chapter 11 bankruptcy on Jan. 13 under case number 21-10269.

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