Former Ascena receives confirmation of modified Chapter 11 plan

By Sarah Lizee

Olympia, Wash., March 3 – Mahwah Bergen Retail Group, Inc., formerly Ascena Retail Group, Inc., received confirmation of its Chapter 11 plan, which was recently modified to reflect changes made after a federal judge voided the original plan in mid-January.

As previously reported, the company asked the U.S. Bankruptcy Court for the Eastern District of Virginia to enter into a supplemental order to implement the instructions of the federal judge and avoid substantial costs to the estates and further harm to many third parties who have relied on the fully consummated relief granted in the confirmation order, which was entered on Feb. 25, 2021.

Following the effective date of the original plan, which was in March 2021, the lead plaintiffs of a putative securities class action and the U.S. trustee overseeing the case appealed the confirmation order; specifically, challenging the third-party release and exculpation provisions contained the plan. The appeal proceeded for 10 months.

Ultimately, the district court vacated the third-party release and exculpation provisions. However, the district court said it didn’t seek to undo any transactions that have occurred in the plan’s undertaking, nor did it require the bankruptcy court to “unwind” the plan.

Thursday’s supplemental order provides for the following relief:

• Deeming the plan confirmed and effective as of the original confirmation date and original effective date, respectively;

• Severing the relevant third-party release provision from the plan and confirmation order;

• Modifying the term “exculpated parties” to be limited to estate fiduciaries and the exculpation provision of the confirmation order to include a gatekeeper provision;

• Adopting the record established at the confirmation hearing, the findings of fact made by the bankruptcy court in the confirmation order and confirmation memorandum opinion, as modified and supplemented by the findings of fact made by the district court in the remand opinion; and

• Authorizing and ratifying all actions taken by the debtors, the reorganized debtors, the plan administrator, or the general unsecured creditor trustee that are or were necessary or appropriate to implement the plan.

Ascena was a Mahwah, N.J.-based specialty retailer offering clothing, shoes and accessories for misses and plus-size women. The company made a pre-packaged Chapter 11 bankruptcy filing on July 23, 2020 under case number 20-33113.

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