Soft Surroundings files bankruptcy, plans sale to Coldwater Creek

By Sarah Lizee

Olympia, Wash., Sept. 11 – Soft Surroundings Holdings, LLC filed Chapter 11 bankruptcy on Monday in the U.S. Bankruptcy Court for the Southern District of Texas, according to a press release.

The company said it has 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.

The company said the RSA is supported by 100% of prepetition secured lenders and 100% of holders of outstanding equity interests.

Soft Surroundings has secured $18 million in debtor-in-possession financing from 1903 Partners, LLC, an affiliate of Gordon Brothers, subject to court approval, to enable the business to continue.

Upon a final order, the financing will include a rollup of $17 million in bridge financing provided by 1903 prior to the petition date.

The facility is set to mature on Dec. 1 and bear interest at SOFR plus 1,200 basis points, subject to a 3% SOFR floor.

There is a $60,000 monitoring fee, a 1% closing fee, a 1% agency fee, a 3% alternate sale transaction fee, and a 2% alternate debt transaction fee.

The company is seeking interim access to $17 million of the facility.

Soft Surroundings said the DIP financing will enable the company to continue to operate the business and meet its financial obligations, including the timely payment of employee wages and benefits without interruption, vendor payment for goods and services received on or after the filing date and other commitments during the restructuring.

Soft Surroundings said it will also begin taking steps to reorganize around its direct-to-consumer and e-commerce operations.

“Over the past year, we have taken significant steps to fortify our financial standing including rightsizing our business to better match current market conditions,” executive chair Bridgit Lombard said in the release.

“Our commitment to our stakeholders has never wavered as we meticulously evaluated the best path forward and are welcoming this next step to financially secure a bright future for Soft Surroundings.

“This will allow us to adapt, restructure and emerge more resilient, ensuring the longevity of the beloved Soft Surroundings brand for our customers and partners.”

In its petition, the company reported up to 49 creditors, up to $50,000 in assets and $50 million to $100 million in liabilities.

Its largest unsecured creditors are Jiaxing Mengdi Import & Export, based in Zhejiang, China, with a $3.4 million claim, Hangzhou Sino-Italy Apparel Co. Ltd., based in Sherman Oaks, Calif., with a $2.75 million claim, Zhejiang Jiaxin Silk Corp. Ltd., based in Zhejiang, China, with a $2.5 million claim, and Zhejiang Top Mondial Garment Co., based in Zhejiang, China, with a $1.05 million claim.

Katten Muchin Rosenman LLP and the Law Office of Liz Freeman are the company’s proposed co-counsel. Its investment banker is SSG Capital Advisors, LLC.

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

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