Soft Surroundings’ Chapter 11 plan effective as of March 31

By Sarah Lizee

Olympia, Wash., April 1 – Soft Surroundings Holdings, LLC’s Chapter 11 plan of liquidation became effective on Sunday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

The plan was confirmed on Nov. 3.

As previously reported, the company entered into a restructuring support agreement through which Coldwater Creek, under the ownership of Newtimes Group, will continue ongoing direct-to-consumer and e-commerce operations.

Under the plan, other secured claims and other priority claims are unimpaired.

Holders of first-lien secured claims, which are estimated at $60,000, will receive 50% of “distributable value” under the plan, which is listed as $75,000 in cash. Holders will also incur the obligation to fund the administrative expense claim backstop amount. This is expected to result in a recovery of 62% for holders.

Holders of second-lien secured claims, estimated at about $47 million, will receive the other 50% of distributable value, resulting in a recovery of less than 1%.

Holders of $29 million of general unsecured claims will receive their pro rata share of GUC trust interests. The trust will be funded with $200,000 in cash, leading to an almost zero recovery.

Holders of section 510(b) claims and interests will receive nothing.

The St. Louis-based retailer of women’s apparel, home, shoe and accessories merchandise filed Chapter 11 bankruptcy on Sept. 10, 2023 under case number 23-90769.

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