Hoop Holdings files for Chapter 11 as part of Disney Store North America sale

New York, March 26 - Hoop Holdings, LLC filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware as part of parent company Children's Place Retail Stores, Inc. review of alternatives for the Disney Store North America business.

Hoop said the filing follows "an extensive review of various strategic alternatives" for the Disney Store North America business, which is run by Hoop under a license from the Walt Disney Co.

Hoop said that it and parent company Children's Place have been "engaged in advanced negotiations concerning the transfer of a substantial portion" of the Disney Store business to Disney.

In connection with these negotiations, Hoop's board decided that in view of the "limited strategic and financial options available under the license agreement that its only alternative was to file bankruptcy."

The Canadian subsidiary expects to file under the Companies' Creditors Arrangement Act in Toronto.

Hoop hopes to complete the transaction by April 30, subject to court approvals.

Hoop named Perry M. Mandarino of restructuring firm Traxi, LLC as chief restructuring officer.

In its filing, Hoop listed $50 million or less of both assets and liabilities.

The largest unsecured creditors listed were Disney Enterprises, Inc., Walt Disney Co. and TDS Franchising, LLC, c/o Walt Disney Co., all with claims of an unknown size. The fourth largest unsecured creditor was Moore Wallace North America of Bannockburn, Ill., with a $655,000 trade claim.

In addition, Hoop has $9.3 million outstanding on its pre-bankruptcy revolver and $15.6 million of letters of credit. Wells Fargo Retail Finance, LLC is agent.

Hoop has obtained a $35 million debtor-in-possession credit facility from Wells Fargo Retail Finance and will be seeking interim access to $30 million of it. The revolver will be priced at prime plus 150 basis points and mature on April 30, to be extended to Sept. 25, 2008 on final approval. If will terminate early if there is a default, all the company's assets are sold or its plan of reorganization becomes effective.

The facility has a closing fee of $337,500, an unused fee of 37.5 bps and a $5,000 monthly servicing fee.

Hoop's business covers 306 Disney Stores in the United States and 16 in Canada.

Hoop is a Secaucaus, N.J., company that designs, contracts to manufacture and sells merchandise under the Disney Store brand name.

Hoop's Chapter 11 case number is 08-10544.

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