Former Urban Brands gets court OK for disclosure statement, settlement

By Jim Witters

Wilmington, Del., Sept. 7 - UBI Liquidating Corp., formerly Urban Brands Inc., received court approval Wednesday for its disclosure statement and an extension of the debtors' exclusive solicitation period through Oct. 31.

During a hearing in the U.S. Bankruptcy Court for the District of Delaware, judge Kevin J. Carey also approved the settlement of a post-sale price adjustment dispute between the debtors and Ashley Stewart Holdings Inc.

Debtors attorney Paul N. Heath said no formal objections to the disclosure statement arose before the Aug. 24 deadline, and the debtors had resolved the few minor reservations conveyed by the U.S. Trustee's office.

A liquidation plan confirmation hearing is scheduled for 1 p.m. ET on Oct. 19.

As previously reported, treatment of creditors will include:

• Holders of administrative expense claims, priority non-tax claims and priority tax claims will be paid in full in cash;

• Bank of America secured lender claims will be paid in full during the bankruptcy case. However, to the extent it has not already been paid before the plan effective date, Bank of America will be paid any outstanding claim amounts under the plan;

• Holders of other secured claims will either receive the collateral securing the claim or receive cash equal to the value of the collateral;

• Holders of general unsecured claims will receive a share of a liquidating trust fund through one or more distributions; and

• Holders of equity interests will receive no distribution.

Heath said the settlement approved Wednesday brings to a close the issues that arose during post-sale price adjustments after Ashely Stewart Holdings bought substantially all the assets of Urban Brands in 2010.

The asset purchase agreement provided for post-sale adjustments based on the difference between estimated and actual inventory, amounts of cash in the stores and amounts of credit card receivables. The buyer also agreed to assume certain pre-petition claims and post-sale liabilities and obligations.

The disputes centered on employee payroll and benefit claims, inventory adjustments, credit card receivables, tax claims and Ashely's "asserted satisfaction of certain claim amounts" set forth in the asset purchase agreement, according to court documents.

The settlement approved Sept. 7 includes:

• Resolution of all claims among the parties relating to post-closing;

• Agreement that the debtors owe New Ashley Stewart the amount of $644,764;

• Resolution of amounts for incurred but not previously reported claims for patient dates of service relating to the period Sept. 21, 2010, through and including Oct. 28, 2010 that are made by persons who are or were employees of the selling entities, are timely and properly submitted by Oct. 28, 2011 and have been discharged by New Ashley Stewart;

• Provision of transition services by New Ashley Stewart to the debtors for the term beginning on Jan. 1, 2011, and except where expressly set forth as having a longer duration in the agreement for transition services, ending on April 30, 2012 or such other date as may be agreed by New Ashley Stewart and the selling entities;

• Procedures for the resolution of 503(b)(9) claims and the payment of such claims upon resolution; and

• Exchange of mutual releases of all claims among the parties arising under or in connection with the asset purchase agreement.

Urban Brands, a Secaucus, N.J.-based plus-sized apparel retailer, filed for bankruptcy on Sept. 21, 2010. Its Chapter 11 case number is 10-13005.

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