Loehmann's creditors agree to support plan; exit seen by Feb. 18

By Caroline Salls

Pittsburgh, Dec. 15 - Loehmann's Capital Corp. has reached agreement with its official committee of unsecured creditors to proceed with its restructuring plan, allowing the company to remain on track to successfully exit Chapter 11 by Feb. 18, according to a company news release.

Through a rights offering to the company's senior secured class A noteholders, which is being backstopped by Istithmar World and Whippoorwill Associates, Inc., Loehmann's will receive a $25 million capital infusion upon emergence from bankruptcy.

Under the terms of the global settlement agreement, general unsecured creditors will receive a share of a $2 million cash distribution.

The creditors committee has agreed to fully support the proposed restructuring plan, which should pave the way for an expedited Chapter 11 process.

As previously reported, Loehmann's has secured court approval for a $33 million revolving credit facility with Crystal Financial LLC for post-bankruptcy financing and an additional $7 million junior facility by Whippoorwill, which will be made immediately available.

With these capital commitments, Loehmann's said it will have enough liquidity and the financial flexibility to fund daily operations without interruption.

The additional $7 million revolver will also allow the company to begin purchasing spring inventory, reserve inventory and make-up inventory.

Loehmann's, a Melville, N.Y.-based retailer of women's clothing, filed for bankruptcy on Nov. 15 in the U.S. Bankruptcy Court for the Southern District of New York. The Chapter 11 case number is 10-16077.

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