Charming Charlie back in Chapter 11 bankruptcy, plans to close stores

By Caroline Salls

Pittsburgh, July 11 – Charming Charlie Holdings, Inc. returned to Chapter 11 bankruptcy with a filing made Thursday in the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the company emerged from a previous bankruptcy filed on Dec. 11, 2017 in April 2018.

Chief financial officer Alvaro E. Bellon said in a statement filed with the court that “The debtors commence these Chapter 11 cases approximately 14 months after completing a prior restructuring and emerging from Chapter 11 with a simplified capital structure, a reduced brick-and-mortar footprint and a revamped ‘Back to Basics’ business plan.”

“Unfortunately, these efforts have not resulted in long-term sustainability,” Bellon said.

The CFO said a lack of liquidity has resulted in reduced inventory, further exacerbating the Charming Charlie debtors’ lack of availability under their asset-based loan.

As a result, Bellon said the company has decided to launch a winddown of Charming Charlie and its non-debtor affiliates.

The company has entered into a consulting agreement under which with the contractual joint venture comprised of Hilco Merchant Resources, LLC and SB360 Capital Partners will conduct going-out-of-business sales at the Charming Charlie stores.

Charming Charlie said the store-closing sales are expected to last roughly two months and generate about $30 million in revenue.

The consultants will receive a fee equal to 1½% of the gross proceeds of the merchandise sold at the stores.

To finance the Chapter 11 cases and the store-closing sales, the company has obtained a commitment for $13 million in debtor-in-possession financing from its pre-bankruptcy ABL lenders.

Specifically, Second Avenue Capital Partners, LLC is serving as co-collateral agent and a lender, and White Oak Commercial Finance, LLC as administrative agent, co-collateral agent and a lender.

The DIP facility is scheduled to mature on July 12, 2020.

Interest will accrue at Libor plus 850 basis points.

According to court documents, Charming Charlie has up to $50,000 in assets and $50 million to $100 million in debt.

The company’s largest unsecured creditors are Guggenheim Securities, LLC/Links Holdings, LLC of New York, with a $2.12 million professional claim; and Tanya Creations LLC of East Providence, R.I., with a $1.09 million trade claim.

The company did not list any other unsecured creditors with claims of $1 million or more.

Klehr Harrison Harvey Branzburg LLP is representing Charming Charlie in its Chapter 11 cases.

Charming Charlie is a Houston-based retailer of jewelry and accessories for women. The Chapter 11 case number is 19-11534.

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