Destination Maternity Chapter 11 bankruptcy case OK’d for dismissal

By Sarah Lizee

Olympia, Wash., Nov. 23 – Destination Maternity Corp.’s motion to dismiss its three-year-long Chapter 11 bankruptcy case was approved on Monday with the U.S. Bankruptcy Court for the District of Delaware, according to an order.

As previously reported, the company sold substantially all of its assets to Marquee Brands, LLC for $50 million in late December 2019. The sale preserved the company’s e-commerce platform and brands while providing proceeds needed to pay down all of the company’s senior secured debt.

After that, the company focused on, among other things, completing going-out-of-business sales at its brick-and-mortar store locations, assisting Marquee in operating the business through June 2020, and negotiating with some administrative claimants, which resulted in settlements that provided for reduced administrative claims by about $3 million.

The company also focused on administering its estates in preparation for concluding the Chapter 11 cases.

Destination Maternity undertook an informal marketing process in 2020 for its unliquidated assets, but received little interest from third parties.

The company said that with the time now expired to monetize its remaining assets, the debtors believe that all of their material assets have been or will be liquidated upon dismissal, and anticipate that they will have about $3.9 million for distribution to creditors.

“With an understanding of the anticipated distributable cash and allowed claims, the debtors and their advisors, in consultation with the committee, determined that there are insufficient funds available to confirm a plan of liquidation,” the company said in its motion.

Destination Maternity said that after considering all potential alternatives, the debtors have determined that a dismissal is the most expeditious and cost-effective process to wind down the debtors’ affairs and maximize recoveries for holders of secured claims and administrative claims.

“A dismissal will result in greater recoveries for such holders by ensuring a faster and less costly completion of these Chapter 11 cases as compared to a conversion to Chapter 7,” the company said.

Destination Maternity is a clothing retailer based in Moorestown, N.J. The company filed bankruptcy on Oct. 21, 2019 under Chapter 11 case number 19-12256.

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