Forever XXI ULC

CCAA

Page last updated: October 29, 2019

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.


On September 29, 2019 (the “Filing Date”) Forever XXI ULC (“Forever 21”, “F21 Canada”, or also referred to as the “Company” or the “Applicant”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act (“CCAA”), R.S.C.1985, c.C-36, as amended, from the Ontario Superior Court of Justice Commercial List (the “Court”). The Initial Order includes among other things, a stay of proceedings against the Company, and the appointment of PricewaterhouseCoopers Inc., LIT as monitor of the Applicant (“PwC” or the “Monitor”).

The Initial Order, among other things:

  1. Granted a stay of proceedings up to and including October 29, 2019 (“Stay Period”);
  2. Authorized the Company to continue to utilize the central cash management system currently in place, as described in the affidavit of Brad Sell, sworn September 29, 2019 (the “Sell Affidavit”), or replace it with another substantially similar central cash management system (the “Cash Management System”);
  3. Permitted the Applicant to proceed with an orderly wind-down of its business;
  4. Approved the Employee Retention Plan (the “ERP”), as described in the Sell Affidavit and authorized payment contemplated by the ERP, up to $250,000;
  5. Granted a first ranking charge, in the amount of $750,000 (the “Administration Charge”), over all of the property of the Applicant, as security for fees and disbursements of the Monitor, counsel to the Monitor, counsel to the Applicant and Alvarez & Marsal Canada Inc., in its capacity as financial advisor (the “Financial Advisor”) to the Applicant; and
  6. Granted a second ranking charge, in the amount of $3,000,000 (the “Directors’ Charge”), over all of the property of the Company, as security for the indemnity granted to the Applicant’s directors and officers.

In accordance with section 23 (1)(ii)(b) of the CCAA and the Initial Order, on October 4, 2019, a notice was sent to every known creditor of the Applicant who has a claim against the Company of more than $1,000. A copy of the notice is posted on the Notices and List of Creditors subpage.


Status update as of October 23, 2019

On October 22, 2019 the Court issued the Stay Extension Order which among other things extended the Stay Period to and including January 31, 2020.

Status update as of October 18, 2019

On October 18, 2019, the Monitor filed its Second Report (the “Second Report”) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada since the Filing Date and the Monitor since the First Report;
  2. F21 Canada’s actual cash flow from the Filing Date to October 12, 2019 as compared to the cash flow forecast included in the Pre-Filing Report;
  3. An updated cash flow statement to reflect the Stay Extension; and
  4. The Monitor’s views on F21 Canada’s request for approval of the Stay Extension.

Status update as of October 17, 2019

On October 17, 2019, the Applicant filed a motion for an order (the “Stay Extension Order”) to extend the Stay Period to and including January 31, 2020 (the “Stay Extension”).

Motion will be heard on October 22, 2019.

Status update as of October 7, 2019

On October 7, 2019, the Court issued the Sale Approval Order, which among other things, approved the Consulting Agreement, the Sale Guidelines and authorized F21 Canada, with the assistance of the Consultant, to conduct the sale of its Merchandise and FF&E in accordance with the Sale Approval Order, the Consulting Agreement, and the Sale Guidelines.  

Status update as of October 3, 2019

On October 3, 2019 the Applicant filed a motion for an order (the “Sale Approval Order”), among other things:

  1. Approving, authorizing, and ratifying the Consulting Agreement between a contractual joint venture comprised of Gordon Brothers Canada ULC and Merchant Retail Solutions, ULC (collectively, the “Consultant”) and F21 Canada dated September 27, 2019  (the “Consulting Agreement”), in the form attached as Exhibit “C” to the Affidavit of Bradley H. Sell sworn October 3, 2019, including the sale guidelines attached as Schedule “A” to the proposed Sale Approval Order (the “Sale Guidelines”), and the transactions contemplated thereunder;
  2. Authorizing F21 Canada, with the assistance of the Consultant, to conduct the sale of F21 Canada’s inventory (“Merchandise”) and its furniture, fixtures, and equipment (“FF&E”) in accordance with the proposed Sale Approval Order, the Consulting Agreement, and the Sale Guidelines;
  3. Authorizing F21 Canada to take any and all actions as may be necessary or desirable to implement the Consulting Agreement;
  4. Ordering that the Consultant shall act solely as an independent consultant to F21 Canada and that it shall not be liable for any claims against F21 Canada other than as expressly provided in the Consulting Agreement or Sale Guidelines; and
  5. Ordering that the claims of the Consultant pursuant to the Consulting Agreement shall not be compromised pursuant to any plan of compromise or arrangement involving F21 Canada and that the Consultant shall be treated as an unaffected creditor in these proceedings and under any plan.

The motion will be heard on October 7, 2019.

Also, on October 3, 2019, the Monitor filed its first report (the “First Report”) with the

Court to provide the Court with information concerning:

  1. An update of the Monitor’s activities since the Filing Date;
  2. The liquidator Bid Solicitation Process (as defined in the First Report); and
  3. F21 Canada’s motion for the Sale Approval Order and the Monitor’s conclusions and recommendations in connection with the foregoing.

 

This Web site will be updated as information becomes available.

For more information, please contact: Tammy Muradova, Telephone: +1 888 444 1193, or via Email.

Contact us

Tammy Muradova

Consulting & Deals, PwC Canada

Tel: +1 888 444 1193

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