Dots settlement agreement between creditors, lenders approved

By Kali Hays

New York, March 27 - Dots, LLC obtained court approval of its settlement agreement between the company, its official committee of unsecured creditors, pre-petition lenders and debtor-in-possession lenders in a Thursday hearing, according to an attorney familiar with the case.

As previously reported, the company claimed the agreement would "fully resolve numerous complex, disputed issues among the settlement parties" and allow its Chapter 11 cases "to move forward without undue delay, uncertainty and expense," including its liquidation and wind-down of business, according to the motion.

Among the terms of the settlement agreement is the automatic release of liens on avoidance actions, the termination of the lien challenge period, release of the settlement parties from all Chapter 11 related responsibilities, and the creation of a separate bank account controlled by the company and its committee intended to pay creditors and expenses

The separate account will be funded with net sale proceeds in four installments, with each installment representing a specified percentage of between $35 million and $45 million in total net sale proceeds.

The settlement also requires an amendment to its debtor-in-possession agreement that implements "a funding mechanism enabling the debtors to undertake an orderly wind-down after the DIP revolver is paid off and retired," according to the motion.

Dots, a Glenwillow, Ohio-based women's clothing and accessories retailer, filed for bankruptcy on Jan. 20 under Chapter 11 case number 14-11016.

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