IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C.
1985, c. C 36, AS AMENDED
AND IN THE MATTER OF BROOKS BROTHERS GROUP, INC., BROOKS
BROTHERS FAR EAST LIMITED, BBD HOLDING 1, LLC, BBD HOLDING 2, LLC,
BBDI, LLC, BROOKS BROTHERS INTERNATIONAL, LLC, BROOKS BROTHERS
RESTAURANT, LLC, DECONIC GROUP LLC, GOLDEN FLEECE
MANUFACTURING GROUP, LLC, RBA WHOLESALE, LLC, RETAIL BRAND
ALLIANCE GIFT CARD SERVICES, LLC, RETAIL BRAND ALLIANCE OF PUERTO
RICO, INC., 696 WHITE PLAINS ROAD, LLC, AND BROOKS BROTHERS CANADA
LTD.
APPLICATION OF BROOKS BROTHERS GROUP, INC. UNDER SECTION 46 OF
THE COMPANIES' CREDITORS ARRANGEMENT ACT, R.S.C. 19850 c. C-36, AS
AMENDED
ALVAREZ & MARSAL CANADA INC.
3.0 PURPOSE OF THIS REPORT ................................................................................................... 6
4.0 BACKGROUND ............................................................................................................................ 7
8.0 ACTIVITIES OF THE INFORMATION OFFICER ............................................................... 28
9.0 A&M CANADA’S QUALIFICATIONS TO ACT AS INFORMATION OFFICER.............. 29
10.0 RECOMMENDATIONS ............................................................................................................ 30
LIST OF APPENDICES
1
Brooks Brothers’ Chapter 11 Cases
1.1 On July 8, 2020 (the “Initial Petition Date”), Brooks Brothers Group, Inc. (“BBGI”),
Brooks Brothers Far East Limited (“BB Far East”), BBD Holding 1, LLC, BBD Holding
2, LLC, Brooks Brothers Restaurant, LLC, Deconic Group LLC, Golden Fleece
Manufacturing Group, LLC (“Golden Fleece”), RBA Wholesale, LLC (“RBA”), Retail
Brand Alliance Gift Card Services, LLC, Retail Brand Alliance of Puerto Rico, Inc., and
696 White Plains Road, LLC (collectively, the “Initial Chapter 11 Debtors”, and together
with Brooks Brothers Canada Ltd. (“BB Canada”), the “Chapter 11 Debtors” or the “BB
Group”), commenced voluntary cases (including BB Canada’s case, the “Chapter 11
Cases”) pursuant to Chapter 11 (“Chapter 11”) of the U.S. Bankruptcy Code (the “U.S.
Bankruptcy Code”) with the United States Bankruptcy Court for the District of Delaware
(the “U.S. Court”).1 BB Canada did not file a petition on the Initial Petition Date.
1.2 Since the commencement of the Chapter 11 Cases, the U.S. Court has granted a number of
orders to permit the Initial Chapter 11 Debtors to continue to operate their business and
advance the Chapter 11 Cases, including, most significantly, the approval of an asset
purchase agreement (as amended, the “APA”) between the Initial Chapter 11 Debtors and
BB Canada (the “Sellers”) and SPARC Group LLC (the “Buyer”) for the sale of
substantially all of the assets of the Chapter 11 Debtors, including substantially all of the
1 Depending on the context in which they appear, references to the Chapter 11 Debtors and the Chapter 11 Cases may
or may not include BB Canada and BB Canada’s Chapter 11 case, respectively.
2
assets of BB Canada (the “Canadian Assets”), for aggregate proceeds totaling $325
million (such order, the “Sale Order”, and such transaction, the “Sale Transaction”).2
1.3 The Sale Transaction closed on August 31, 2020 (the “Closing Date”), with the exception
of the sale of the Canadian Assets (which consists principally of inventory) subject to
subsequent conveyance pending approval of the sale of the Canadian Assets free and clear
of all claims and encumbrances by the Canadian Court (as defined below). The conveyance
and approval of the sale of the Canadian Assets are to be facilitated by these CCAA
Recognition Proceedings (as defined below), as set forth in the second amendment to the
APA dated August 31, 2020 (the “Second Amendment”) and a U.S. Court-approved
Stipulation (as defined below) that is described in greater detail below.
Addition of BB Canada as a Chapter 11 Debtor
1.4 In order to achieve these objectives, on September 10, 2020, BB Canada filed: (i) a
voluntary petition for relief pursuant to Chapter 11 of the U.S. Bankruptcy Code with the
U.S. Court; and (ii) a motion to obtain an order to apply all previous orders in the Chapter
11 Cases, including the Sale Order, to BB Canada (the “All Orders Order”).
1.5 On September 11, 2020, the U.S. Court entered an order (the “Foreign Representative
Order”) authorizing BBGI to act as foreign representative (the “Foreign
Representative”) on behalf of the estates of the Chapter 11 Debtors. The U.S. Court also
entered an order (the “Second Joint Administration Order”) directing the joint
administration of BB Canada’s and the Initial Chapter 11 Debtors’ Chapter 11 Cases.
2 The initial purchase price was $305 million. The first amendment to the APA dated August 11, 2020 (the “First
Amendment”) increased the purchase price to $325 million. The purchase price is subject to adjustments.
3
1.6 On September 14, 2020, the Foreign Representative brought an application before this
Court (the “Canadian Court”) pursuant to Part IV of the Companies’ Creditors
Arrangement Act (“CCAA”) (the “CCAA Recognition Proceedings”, and together with
the Chapter 11 Cases, the “Restructuring Proceedings”) for an initial recognition order
(the “Initial Recognition Order”), among other things:
(a) declaring that BBGI is a foreign representative as defined in section 45 of the
CCAA;
(b) declaring that the Chapter 11 Cases are recognized as a “foreign main proceeding”
under the CCAA; and
(c) granting a stay of proceedings against the Chapter 11 Debtors.
1.7 Additionally, on September 14, 2020, BBGI brought an application before the Canadian
Court for a supplemental order (the “Supplemental Order”), among other things:
(a) recognizing and enforcing the Foreign Representative Order and the Second Joint
Administration Order in Canada;
(b) appointing Alvarez & Marsal Canada Inc. (“A&M Canada”) as the information
officer in respect of the CCAA Recognition Proceedings (in such capacity, the
“Information Officer”);
(c) further granting a stay of proceedings in respect of the Chapter 11 Debtors;
(d) granting a super-priority charge up to a maximum of CDN$350,000 (the
“Administration Charge”) over the Chapter 11 Debtors’ property in Canada in
favour of Canadian counsel to the Chapter 11 Debtors, the Information Officer and
4
counsel to the Information Officer as security for their professional fees and
disbursements in respect of these CCAA Recognition Proceedings; and
(e) granting a second ranking charge, ranking only behind the Administration Charge
up to a maximum of CDN$200,000 (the “Directors’ Charge”) over the Chapter 11
Debtors’ property in Canada for the benefit of the directors and officers of the
Chapter 11 Debtors (the “D&Os”) as security for an indemnity provided by the
Chapter 11 Debtors in favour of the D&Os pursuant to the Supplemental Order.
1.8 On September 14, 2020, the Canadian Court issued the Initial Recognition Order and the
Supplemental Order.
1.9 On September 18, 2020, the U.S. Court entered the All Orders Order without the need for
a hearing as no objections had been filed by the corresponding objection filing deadline.
1.10 Further information regarding these CCAA Recognition Proceedings can be found on the
Information Officer’s website at https://alvarezandmarsal.com/brooksbrotherscanada (the
“Case Website”).
2.0 TERMS OF REFERENCE AND DISCLAIMER
2.1 In preparing this Report of the Information Officer (the “First Report”), A&M Canada
has relied solely on information and documents provided by the Foreign Representative,
the other Chapter 11 Debtors, their U.S.-based advisors, and their Canadian legal counsel
(collectively, the “Information”).
5
(a) the Information Officer has reviewed the Information for reasonableness, internal
consistency and use in the context in which it was provided. However, the
Information Officer has not audited or otherwise attempted to verify the accuracy
or completeness of the Information in a manner that would wholly or partially
comply with Canadian Auditing Standards (“CASs”) pursuant to the Chartered
Professional Accountants Canada Handbook (the “Handbook”), and accordingly,
the Information Officer expresses no opinion or other form of assurance
contemplated under CASs in respect of the Information; and
(b) some of the information referred to in this First Report consists of forecasts and
projections. An examination or review of the financial forecasts and projections,
as outlined in the Handbook, has not been performed.
2.3 Future-oriented financial information referred to in this First Report was prepared based
on estimates and assumptions made by the Chapter 11 Debtors’ management. Readers are
cautioned that since projections are based upon assumptions about future events and
conditions that are not ascertainable, actual results will vary from the projections, and the
variations could be significant.
2.4 This First Report should be read in conjunction with the Affidavit of Stephen Marotta
sworn on September 13, 2020 (the “Initial Marotta Affidavit”) and the Affidavit of
Stephen Marotta sworn on September 21, 2020 (the “Second Marotta Affidavit”).
2.5 Unless otherwise stated, all monetary amounts contained herein are expressed in United
States dollars.
3.1 The purpose of this First Report is to:
(a) assist the Canadian Court in considering the Foreign Representative’s motion for
an Order (the “Recognition, Approval and Vesting Order”) seeking, among other
things:
(i) recognition in Canada of the All Orders Order;
(ii) approving the sale of the Canadian Assets, including the inventory of BB
Canada (the “Canadian Acquired Inventory”), to the Buyer;
(iii) directing the Buyer to pay on the closing of the sale of the Canadian Assets
the purchase price for the Canadian Acquired Inventory to BBGI in
accordance with the terms and conditions of the APA and the Stipulation;
(iv) vesting all of the right, title and interest of the Chapter 11 Debtors in and to
the Canadian Assets, including the Canadian Acquired Inventory, free and
clear of and from any and all Claims and Encumbrances (both, as defined
in the Recognition, Approval and Vesting Order) to the Buyer, upon
delivery to the Buyer by the Information Officer of a certificate (the
“Information Officer’s Certificate”);
(v) ordering and directing the Information Officer to file the Information
Officer’s Certificate with the Canadian Court as soon as practicable
following delivery thereof to the Buyer;
(vi) authorizing and directing the Chapter 11 Debtors to maintain reserve
account balances in their Canadian bank accounts totaling in aggregate, no
7
less than the aggregate amount of the Administration Charge and the
Directors’ Charge; and
(vii) ordering that the amount of the Directors’ Charge may, from time to time,
be reduced to an amount to be determined by the Chapter 11 Debtors, in
consultation with the Information Officer, upon the service by the
Information Officer of a certificate on the service list in these CCAA
Recognition Proceedings; and
(b) provide the Canadian Court with certain background information concerning the
Chapter 11 Debtors and the Restructuring Proceedings, including:
(i) the Chapter 11 Debtors’ business, operations, organizational structure and
financing facilities;
(ii) the CCAA Recognition Proceedings, the Chapter 11 Cases and the events
leading up to them;
(iii) the All Orders Order which the Foreign Representative is seeking
recognition of in Canada; and
(iv) the initial activities of the Information Officer.
4.0 BACKGROUND
Company Overview
4.1 The BB Group’s business (“Brooks Brothers”) is the oldest apparel business in the United
States and is a lifestyle brand for men, women and children, which markets and sells
footwear, eyewear, bags, jewelry, bedding, linens and more. Brooks Brothers has
8
expanded across the globe, growing into one of the world’s leading clothing retailers with
over 1,400 locations in over 45 countries, and a leading e-commerce platform built on best-
in-class systems and supporting a direct-to-consumer website (www.brooksbrothers.com)
and mobile application.
4.2 With the exception of BB Far East, in which BBGI holds a 99.8% interest, BBGI directly
or indirectly owns all of the shares of the other Chapter 11 Debtors. A copy of the corporate
organization chart illustrating the ownership structure of the Chapter 11 Debtors is attached
as Appendix “A”.
Prior to the Sale Transaction
4.3 Prior to the Sale Transaction, the BB Group’s operations were headquartered at 346
Madison Avenue in Manhattan, New York where the flagship Brooks Brothers store is
located. The BB Group also owned an office building located in Enfield, Connecticut that
houses certain of the corporate functions of Brooks Brothers, including finance, human
resources, IT and real estate. The BB Group also maintained two distribution centres to
process merchandise and warehouse inventory and to support Brooks Brothers stores in the
United States and Canada, including a 600,000 square foot distribution facility in Enfield,
Connecticut, and a 250,000 square foot distribution facility in Clinton, North Carolina.
4.4 The BB Group managed all third-party merchandise sourcing through BB Far East which
operated its centralized global trading office in Hong Kong and acted as a local
intermediary between the BB Group and its foreign sourcing base. Inventory was
purchased by BB Far East and subsequently sold to affiliates and third-party licensees on
an arm’s-length basis.
After the Sale Transaction
4.5 Following the Closing Date, the BB Group no longer owns Brooks Brothers or the
Acquired Assets (as defined below), except that:
(a) the BB Group continues to hold leases (including those of BB Canada) that the
Buyer has yet to designate for assumption and assignment or rejection pursuant to
the APA; and
(b) until an order is obtained from the Canadian Court approving the conveyance of
the Canadian Acquired Inventory free and clear, together with the remaining
Canadian Assets, and such conveyance subsequently occurs, BB Canada continues
to own the Canadian Assets, including the Canadian Acquired Inventory.
BB Canada
4.6 During the fiscal year ended 2019, the BB Group generated revenue totaling over $991
million (of which less than 3% was attributable to BB Canada).
4.7 BB Canada is incorporated in Ontario. The Canadian operations are comprised of 12 retail
stores operating out of leased facilities, with seven (7) locations in Ontario, three (3) in
British Columbia and two (2) in Alberta. BBGI has provided an indemnity in the form of
a guarantee to certain landlords under some of the leases of BB Canada. As a result of the
COVID-19 pandemic, BB Canada closed all of its stores in mid-March and did not pay
rent to its landlords for the months of April through August 2020. Following the granting
of the Initial Recognition Order and the Supplemental Order, counsel for the Foreign
Representative has advised the Information Officer that pro-rata rent for the balance of
September has been paid.
10
4.8 Pursuant to an agreement dated March 3, 2020, 115161 Canada Inc. (“Remco”), a third-
party, provided distribution centre services to BB Canada, which currently has a small
amount of inventory located at Remco’s facility.
4.9 As of March 2020, BB Canada employed approximately 150 employees, none of which
were unionized (63 full-time and 87 part-time), with 94 of its employees based in Ontario,
31 in British Columbia and 25 in Alberta. All BB Canada employees were laid off on or
about mid-March as all stores closed due to the COVID-19 pandemic.
4.10 BB Canada employees have been paid all accrued wages up to the date of their respective
layoffs, but certain employees have accrued vacation pay totaling approximately
CDN$200,000 that has not been paid.
4.11 BB Canada offers extended medical insurance to employees that is fully insured and
administered by Canada Life (approximately 80 employees are enrolled), as well as a
Registered Retirement Savings Plan (“RRSP”) also administered by Canada Life. BB
Canada previously matched eligible employees’ monthly contribution to their RRSP,
however that matching was frozen on April 26, 2020. As of the Initial Petition Date, only
one employee was participating in the RRSP and no amounts were due thereunder.
4.12 BBGI provides human resources services to BB Canada and BB Canada’s payroll is
administered by BBGI which utilizes third-party payment processing companies to
provide, among other things, a payment processing system. BB Canada also uses a third-
party time keeping system arranged for by BBGI to track time worked by hourly
employees.
11
4.13 The Information Officer understands that the Buyer (through a licensee) has commenced
discussions with BB Canada’s landlords to see if new lease terms can be negotiated that
could lead to some or all of the Canadian store locations re-opening and related
employment for some or all of the Canadian employees that are currently on lay off.
4.14 For a more detailed discussion of the Chapter 11 Debtors’ business, please refer to the
Initial Marotta Affidavit (including the First Day Declaration exhibited thereto).
Secured Credit Facilities and Security Review
4.15 As of the Initial Petition Date, the Chapter 11 Debtors had approximately $392.1 million
in outstanding funded debt obligations which are described in the First Day Declaration.
4.16 As of the Initial Petition Date, certain of the Chapter 11 Debtors were party to a credit
agreement dated June 28, 2019 (as amended on April 22, 2020, and as further amended,
modified, or otherwise supplemented from time to time, the “ABL Credit Agreement”),
under which BB Canada is a guarantor.
4.17 Key terms and components of the ABL Credit Agreement include the following:
ABL Credit Facility
Borrowers • Among others, BBGI, RBA, and Golden Fleece (collectively, the “Prepetition
ABL Borrowers”)
Guarantor • BB Canada, pursuant to a guarantee dated June 28, 2019 and security agreement
dated June 28, 2019 from BB Canada secured by BB Canada’s inventory, credit
card receivables, and cash and accounts.
Lenders • Wells Fargo Bank, National Association (“Wells Fargo”) as administrative
agent and collateral agent (in such capacities, the “Agent”), L/C Issuer, and
Swing Line Lender (both as defined in the ABL Credit Agreement), the other
lenders party thereto from time to time (the “Prepetition ABL Lenders”)
12
Description
Outstanding
• Revolving credit facility with a maximum aggregate principal amount of $300
million (of which up to $30 million is available for the issuance of letters of
credit) (the “Prepetition Revolving Facility”) – approximately $182.9 million,
plus approximately $7.9 million in respect of issued letters of credit outstanding
as of the Initial Petition Date; and
• A first-in-last-out term loan facility in an aggregate principal amount of $15
million (the “Prepetition FILO Loan”, together with the Prepetition Revolving
Facility, the “Prepetition ABL Facility”) – approximately $15 million
outstanding as of the Initial Petition Date.
• There is also approximately $6.3 million outstanding under a bank product with
J.P. Morgan Chase.
Security • Prior to the Closing Date, obligations under the Prepetition ABL Facility were
secured by a first priority security interest and continuing lien (the “Prepetition
ABL Liens”) on Collateral (as defined in the ABL Credit Agreement) which
included, subject to certain exceptions and carve outs, the Chapter 11 Debtors’
cash and accounts, U.S. inventory, credit card receivables and trade account
receivables (the “Prepetition ABL Collateral”);
• Following the Closing Date, the Agent has retained the Prepetition ABL
Lenders’ liens and claims against BB Canada, on behalf of and solely for the
benefit of the Chapter 11 Debtors.
4.17 The Information Officer requested that its independent counsel, Torys LLP (“Torys”),
review the security granted by BB Canada to the Agent. Torys and certain other local firms
have completed their respective reviews and provided verbal opinions to the Information
Officer or Torys, as applicable, which, subject to certain customary assumptions and
qualifications, provide that: (a) the applicable security documents constitute a legal,
binding and enforceable obligation of BB Canada in favour of the Agent; (b) each of the
applicable security documents creates in favour of the Agent a valid security interest in the
applicable personal property of BB Canada identified therein under the laws of the
provinces in which BB Canada has assets (Ontario, Alberta and British Columbia); and (c)
each of the applicable security documents has been registered, filed or recorded in all public
offices where the registration, filing or recording thereof is required under the laws of the
provinces in which BB Canada has assets (namely, Ontario, Alberta and British Columbia)
to perfect the security interest created by such security document in the applicable personal
13
property located in such provinces. Final security opinions will be delivered in the near
term.
Canadian Cash Management System
4.18 BB Canada has six (6) active Canadian bank accounts maintained with the Royal Bank of
Canada (“RBC”) and JPMorgan Chase National Association (“JPM”).
4.19 Canadian customer cash collections are deposited into one of two zero balance accounts
with JPM (one used to receive credit card receipts and the other for cash receipts) that are
swept daily into the Canadian JPM operating account and then transferred to BB Canada’s
JPM disbursement account. The majority of BB Canada’s receipts are credit card or other
non-cash forms of payment.
4.20 Certain cash receipts from BB Canada’s retail operations are also collected into an RBC
collections account and then transferred to an RBC disbursement account, or to BBGI’s
operating account. The JPM and RBC disbursement accounts are used to pay vendors, taxes
and other third-party expenses associated with the operations of BB Canada. BB Canada
also has an RBC U.S. dollar denominated account which is presently inactive.
4.21 The CCAA Recognition Proceedings will be funded through intercompany transfers from
other Chapter 11 Debtors, as permitted under and in accordance with the Cash Management
Order (as defined herein). If such authority and direction are granted by the Canadian
Court, the Chapter 11 Debtors will also maintain reserve account balances in their
Canadian bank accounts totaling in aggregate, no less than the aggregate amount of the
Administration Charge and the Directors’ Charge.
Integration of Canadian Operations with U.S. Operations
14
4.22 As described in the Initial Marotta Affidavit, prior to the Sale Transaction, BB Canada was
entirely dependent on the U.S. Chapter 11 Debtors for its corporate and business support
services (“Support Services”), including marketing, logistics, executive, legal,
accounting, finance, treasury, tax, insurance/risk management, real estate, human
resources, information technology support services and warehousing services.
4.23 Following the Sale Transaction, the Support Services continue to be provided by the
Chapter 11 Debtors on a transitional basis in accordance with the provisions of the APA
and certain other agreements.
Events Leading to the Restructuring Proceedings
4.24 Prior to the COVID-19 pandemic, Brooks Brothers, like many other retailers in the highly
competitive specialty retail industry, was negatively impacted by significant operational
and manufacturing challenges due largely to shifting retail industry trends in recent years.
4.25 Brooks Brothers’ management team made significant efforts to reduce costs, improve
efficiencies, and increase brand loyalty and presence and in early 2020, had begun steps to
advance a program with the potential to materially increase EBITDA.
4.26 In 2019, the BB Group, with the assistance of its advisor PJ Solomon, L.P. (the “Sale
Advisor”), had also begun exploring strategic alternatives, including a potential sale of all
or substantially all of the assets of the BB Group. However, as discussions between the
BB Group, the Sale Advisor and potential investors progressed, so too did the COVID-19
crisis.
4.27 In late February 2020, the BB Group began to face liquidity and operational challenges
associated with the spread of COVID-19. The BB Group’s international operations
15
suffered and foreign vendors were unable to operate or produce and ship inventory leading
to a decrease in the borrowing base under the Prepetition ABL Facility, negatively
impacting the BB Group’s available liquidity. By mid-March 2020, consistent with
governmental health guidelines and directives, Brooks Brothers had closed all of its North
American stores and headquarters.
4.28 As this severely jeopardized its ability to consummate any previously contemplated
transaction, the BB Group and their advisors were forced to re-assess the appropriate
strategic transaction and refocus their efforts on restructuring the business through a filing
under Chapter 11 of the U.S. Bankruptcy Code.
4.29 In order to assist with the transition into the Chapter 11 Cases, the BB Group appointed
two new independent directors to the board of directors of BBGI (the “Board”) and
appointed a special committee of the Board to oversee the BB Group’s restructuring
process, which was to involve efforts to: (i) carefully manage liquidity; (ii) obtain financing
to preserve value during the Chapter 11 Cases and to maximize value through a sale
process; and (iii) attempt to secure a transaction that would ensure the continuation of
Brooks Brothers and maximize value for creditors.
5.0 ALL ORDERS ORDER
5.1 The Foreign Representative is seeking recognition of the All Orders Order which provides
that certain orders previously granted in the Chapter 11 Cases also apply to BB Canada.
The Information Officer has reviewed these orders and is advised by the Information
Officer’s counsel that the relief provided for in such orders is typical in many Chapter 11
Cases and is frequently recognized under Part IV of the CCAA by Canadian courts. Copies
16
of all such orders and other documents related to the Chapter 11 Cases are available on the
case website maintained by Prime Clerk LLC (“Prime Clerk”) at:
https://cases.primeclerk.com/brooksbrothers/Home-Index
5.2 Certain key orders included in the All Orders Order are described below. Other orders are
described at Appendix “B”.
(a) Interim and Final Orders (I) Authorizing Debtors to (A) Continue Existing Cash
Management System, (B) Honor Certain Prepetition Obligations Related to the Use
Thereof, (C) Continue Intercompany Transactions and Provide Administrative
Expense Priority for Postpetition Intercompany Claims and (D) Honor Prepetition
Bank Fees; (II) Extending Time to Comply with 11 U.S.C. § 345(b); and (III)
Granting Related Relief (together, the “Cash Management Order”). The Cash
Management Order, inter alia, authorized the Chapter 11 Debtors to continue to
maintain and use their existing cash management system, including maintenance of
existing bank accounts, use of existing deposit practices, honouring certain
prepetition obligations related to the cash management system and continuance of
certain ordinary course intercompany transactions. The Agent was prohibited from
sweeping any funds from the Chapter 11 Debtors’ listed bank accounts or
exercising any remedies against those bank accounts, absent further order from the
U.S. Court.
(b) Interim and Final Orders (I) Authorizing the Debtors to Obtain Postpetition
Financing, (II) Authorizing the Debtors to Use Cash Collateral, (III) Granting
Liens and Providing Superpriority Administrative Expense Status, (IV) Granting
Adequate Protection to the Prepetition Secured Parties, (V) Modifying Automatic
17
Stay, (VI) Scheduling a Final Hearing, and (VII) Granting Related Relief (the
“Interim DIP Order” and the “Final DIP Order”, respectively). The Chapter 11
Cases were financed by way of negotiated debtor-in-possession financing (the
“DIP Financing”) pursuant to the terms and conditions of a certain debtor-in-
possession term loan agreement (the “DIP Agreement”), by and among the
applicable companies within the BB Group, as borrowers and guarantors, and
ABG-BB, LLC, as administrative agent. The DIP Agreement provides for DIP
Financing in the aggregate principal amount of up to $80 million. The Interim DIP
Order provided that only up to $60 million of this may be advanced with the Final
DIP Order increasing that to the full $80 million available. The Final DIP Order
also, inter alia, approved the DIP Agreement, authorized the Chapter 11 Debtors to
obtain the DIP Financing pursuant to the DIP Agreement and established the
position of the Chapter 11 Debtors’ obligations under the DIP Agreement as being
super-priority claims.
(c) Order (I) Approving (A) Bidding Procedures, (B) Designation of Stalking Horse
Bidder and Stalking Horse Bid Protections, (C) Scheduling Auction and Sale
Hearing, (D) Form and Manner of Notice of Sale, Auction, and Sale Hearing, and
(E) Assumption and Assignment Procedures and (II) Granting Related Relief (the
“Bidding Procedures Order”). The Bidding Procedures Order approved the
following:
(i) the Chapter 11 Debtors’ entry into a stalking horse agreement and related
bid protections;
18
(ii) the bidding procedures in connection with the sale of all or substantially all
of the Chapter 11 Debtors’ assets (the “Bidding Procedures”);
(iii) the procedures for the assumption and assignment of executory contracts
and unexpired leases; and
(iv) the form and manner of notice of the sale hearing, assumption procedures
and auction results.
The Bidding Procedures Order also established the procedures by which interested
parties could engage in a diligence process in relation to the BB Group’s assets,
including the interested party’s execution of a confidentiality agreement and its
obtaining access to a confidential electronic data room. The Bidding Procedures
provided the minimum criteria required for a bid to be considered a “Qualified Bid”
thereunder.
Although the Bidding Procedures targeted bids for all or substantially all of the BB
Group’s assets, a bid for a portion of the assets was expressly permitted. Interested
parties were advised and understood that they could make a standalone bid for BB
Canada. The Bidding Procedures also contemplated a credit bid.
The Bidding Procedures established the following timeline for the sale process:
Key Steps Deadline
Deadline to submit bids August 6, 2020 at 4:00 pm (prevailing Eastern Time)
Deadline to file objections to stalking horse
sale transaction
Deadline for Chapter 11 Debtors to notify
bidders of status as qualified bidders
August 9, 2020 at 4:00 pm (prevailing Eastern Time)
19
bid
Deadline to (i) file notice and identities of
successful bid(s) and back-up bid(s) and (ii)
provide affected counterparties with the
successful bidder’s proposed form of
adequate assurance of future performance
with respect to proposed assigned contracts, if
applicable.
Deadline to file objections to (i) identity of
successful bidder, (ii) conduct of auction, (iii)
cure, and (iv) adequate assurance
August 12, 2020 at 4:00 pm (prevailing Eastern Time)
Deadline to reply to objections to (i) sale
transaction, (ii) identity of successful bidder,
(iii) conduct of auction, (iv) cure, and (v)
adequate assurance
August 13, 2020 at 11:59 pm (prevailing Eastern Time)
Sale hearing August 14, 2020 at 10:00 am (prevailing Eastern Time)
(d) Order (I) Approving Procedures for Rejecting Unexpired Leases of Nonresidential
Real Property and (II) Granting Related Relief (the “Lease Rejection Procedures
Order”). The Lease Rejection Procedures Order, inter alia, establishes the
procedures by which the Chapter 11 Debtors may reject or abandon their various
unexpired leases (the “Rejection Procedures”) and authorizes any such rejections
and abandonments. In order for the Chapter 11 Debtors to reject or abandon a lease,
the Rejection Procedures provide that the Chapter 11 Debtors must, inter alia, file
with the U.S. Court and serve on the counterparty to the lease a rejection notice, the
form of which is attached to the Lease Rejection Procedures Order. This Order also
provides the procedures by which parties may object to a proposed rejection or
abandonment.
20
(e) Order (I) Extending the Deadline to Assume or Reject Unexpired Leases of
Nonresidential Real Property, and (II) Granting Related Relief (the “Lease
Rejection Deadline Extension Order”). The Lease Rejection Deadline Extension
Order extends the deadline by which the Chapter 11 Debtors may assume or reject
unexpired leases under the Lease Rejection Procedures Order through and to the
earlier of: (i) February 3, 2021; and (ii) the date of entry of an order confirming a
plan.
(f) Order (I) Approving Asset Purchase Agreement, (II) Authorizing Sale to the
Stalking Horse Bidder of the Acquired Assets Free and Clear of Liens, Claims,
Encumbrances and Other Interests, (III) Authorizing Assumption and Assignment
of Certain Executory Contracts and Unexpired Leases in Connection Therewith,
and (IV) Granting Related Relief (previously defined as the “Sale Order”). The
Sale Order provides, inter alia, for the approval of the Sale Transaction and for the
Chapter 11 Debtors’ assumption, assignment and transfer to the Buyer of certain
contracts designated pursuant to the terms of the APA as being assigned to the
Buyer (the “Assigned Contracts”). Additional Information in respect of the Sale
Order, the APA and the Sale Transaction is provided below.
(g) Order Approving Stipulation and Agreement with Wells Fargo Bank, National
Association Regarding Sale Order and Release of Liens and Claims (the “Wells
Fargo Stipulation Approval Order”). The Wells Fargo Stipulation Approval
Order approves a stipulation agreement between, inter alia, BBGI and the Agent
which establishes that certain payments will be made by the Chapter 11 Debtors to
the Agent pursuant to the Prepetition ABL Facility and provides for mechanics
21
regarding the retention of certain Canadian collateral in relation to the APA (the
“Stipulation”). The Stipulation, which is described further below:
(i) confirms that notwithstanding that the conveyance of the Canadian
Acquired Inventory would occur post-closing, the Chapter 11 Debtors
would still pay the full settlement payment amount under the Sale
Transaction to the Agent upon closing;
(ii) provides that, as consideration for the Initial Chapter 11 Debtors providing
the Agent with the full payment amount (including the Canadian Collateral
Value Amount (as defined therein)) in respect of the anticipated post-
closing sale of the Canadian Acquired Inventory, the Agent would still
retain (rather than release) the Prepetition ABL Liens against the Prepetition
ABL Collateral owned by BB Canada, on behalf of and solely for the benefit
of the Initial Chapter 11 Debtors, and would turn over any proceeds of the
Canadian Acquired Inventory received by the Agent to BBGI; and
(iii) affirms that the Buyer would pay the purchase price of approximately $6
million related to the Canadian Acquired Inventory directly to BBGI upon
conveyance of the Canadian Acquired Inventory in accordance with the
terms of the APA.
6.0 THE SALE TRANSACTION
6.1 As indicated above, in accordance with the provisions of the APA and the Stipulation, the
Sale Transaction closed on August 31, 2020, with the exception of the conveyance of the
22
Canadian Assets, including the Canadian Acquired Inventory, which are subject to
subsequent conveyance pending approval of its sale by the Canadian Court.
6.2 Certain material provisions of the APA include:
(a) the assets to be acquired are all of the Sellers’ right, title and interest in and to all
of the properties, rights, interests and other tangible and intangible assets of the
Sellers used in, held for use in, or relating to Brooks Brothers, subject to certain
exceptions, including inter alia, an express exclusion of inventory located in
Canada that the Sellers cannot transfer to the Buyer free and clear (collectively, the
“Acquired Assets”);
(b) pursuant to the First Amendment, the purchase price for the Acquired Assets was
raised to $325 million, subject to certain adjustments on account of estimated
inventory and customer deposits;
(c) the Acquired Assets include all cash and cash equivalents located at the BB Group’s
stores, in depository accounts or on route to store depository accounts and petty
cash at stores or the corporate office, but excludes all other cash or cash equivalents,
all credit card receivables and all accounts receivable;
(d) the Buyer acquired certain liabilities, including:
(i) all liabilities under assumed leases and transferred contracts arising from
and after the Closing Date;
(ii) Buyer Cure Costs (as defined in the APA) in respect of assumed leases;
(iii) liabilities relating to or arising out of the ownership, possession, operation
or use of any Acquired Assets from and after the Closing Date;
23
(iv) liabilities in respect of redeemable and/or prepaid purchase cards/gift cards;
and
(v) liabilities in respect of transferred employees after closing3; and
(e) the Buyer has the right to designate each of the Sellers’ leases (other than those
expressly assumed in the APA) (the “Designated Leases”) for: (i) assumption and
assignment; or (ii) rejection until the later of (A) December 31, 2020, and (B) the
date on which the U.S. Court enters an order confirming a reorganization and
liquidation plan concerning the Sellers in the Chapter 11 Cases, and any Designated
Lease not designated by such date will be deemed to have been rejected. The Buyer
is required to designate for assumption and assignment no fewer than 125 leases.
6.3 Pursuant to the Sale Order, a landlord may object to an assumption and assignment, or the
cure costs proposed to be paid to such landlord, in accordance with the terms of the Sale
Order and the APA.
6.4 On August 31, 2020, the Sellers and the Buyer specifically addressed the process for the
acquisition of the Canadian Assets, including the Canadian Acquired Inventory, pursuant
to the Second Amendment. The Second Amendment:
(a) expressly excludes the Canadian Assets from the Acquired Assets;
(b) requires BB Canada, at its sole cost and expense, to seek an order from the Canadian
Court authorizing the sale of the Canadian Acquired Inventory free and clear to the
Buyer;
3 The Information Officer understands that all but one of the Canadian employees is intended to be treated as a
transferred employee under the APA.
24
(c) provides that the purchase price for the Canadian Acquired Inventory will be paid
to BBGI; and
(d) provides that if the order approving such sale is not obtained by November 29,
2020, the Buyer is under no obligation to acquire the Canadian Acquired Inventory.
6.5 In respect of the Sale Order, the U.S. Court found and determined, inter alia, that:
(a) the Sale Order constitutes a final order and that the Chapter 11 Debtors have
demonstrated compelling circumstances and a good, sufficient, and sound business
purpose and justification for the immediate approval and consummation of the Sale
Transaction as contemplated by the APA;
(b) proper, timely, adequate, and sufficient notice of, inter alia, the motion for the Sale
Order, the Bidding Procedures, the Assumption Procedures, the APA, the Sale
Transaction, the hearing in respect thereof, and all deadlines related thereto, has
been provided in accordance with applicable U.S. bankruptcy laws and the Bidding
Procedures Order;
(c) a fair and reasonable opportunity to object to, and be heard with respect to, the
motion for the Sale Order and the Sale Transaction was given to all persons entitled
to notice pursuant to the Bidding Procedures Order;
(d) the Chapter 11 Debtors have demonstrated good, sufficient, and sound business
purposes and justifications for approval of and entry into the APA, and the other
agreements, documents, and instruments deliverable thereunder or attached thereto
or referenced therein (the “Transaction Documents”);
25
(e) the Chapter 11 Debtors’ entry into and performance under the Transaction
Documents: (i) constitute a sound and reasonable exercise of the Chapter 11
Debtors’ business judgment consistent with their fiduciary duties; (ii) provide value
to and are beneficial to the Chapter 11 Debtors’ estates, and are in the best interests
of the Chapter 11 Debtors and their stakeholders; and (iii) are reasonable and
appropriate under the circumstances;
(f) the Bidding Procedures provided a full, fair, and reasonable opportunity for any
entity or person to make an offer to purchase the Acquired Assets. The Chapter 11
Debtors and Buyer complied with the Bidding Procedures and the Bidding
Procedures Order in all respects except as properly waived in the exercise of their
fiduciary duties in accordance with the Bidding Procedures;
(g) the Chapter 11 Debtors engaged in a robust and extensive marketing and conducted
a fair and open sale process pursuant to the Bidding Procedures Order and the
Bidding Procedures; and
(h) the consideration to be provided by the Buyer under the APA is fair and reasonable
consideration and such consideration constitutes the highest and best bid for the
Acquired Assets.
6.6 The Sale Order also provides, among other things, that:
(a) all objections to the Sale Order and relief requested that have not been withdrawn,
waived, resolved, adjourned, or otherwise settled, are denied and overruled on the
merits;
(b) the APA and the Transaction Documents, including all amendments, are approved;
26
(c) the Chapter 11 Debtors are authorized and directed to transfer the Acquired Assets
to the Buyer on the Closing Date, and the transfer of the Acquired Assets in
accordance with the terms of the APA will be free and clear of all interests of any
kind and shall vest the Buyer with all right, title and interest in such Assets; and
(d) the Chapter 11 Debtors are authorized to assume and assign the Assigned Contracts
to the Buyer free and clear of all claims, and to execute and deliver to the Buyer
such documents or other instruments as may be necessary to assign and transfer the
Assigned Contracts to the Buyer as provided in the APA.
6.7 As described in the Second Marotta Affidavit, prior to the Sale Order, the Chapter 11
Debtors reached a global resolution with the Official Committee of Unsecured Creditors,
the Agent and the Prepetition ABL Lenders that provides for among other things, the
impairment and satisfaction of the claims of the Prepetition ABL Lenders, which claims
exceeded $214 million, for approximately $205.8 million and for the sale proceeds that
remain to be paid to be used to fund the efficient administration and wind-down of the
Chapter 11 Cases.
6.8 BB Canada has benefitted from and guaranteed the Prepetition ABL Facility indebtedness
and granted security to the Agent in connection therewith, which security has been
determined by Torys and local counsel, as applicable, to be a legal, binding and enforceable
obligation of BB Canada in favour of the Agent, as more fully described above. On this
basis, and pursuant to the APA and the Wells Fargo Stipulation Approval Order, the
purchase price of approximately $6 million attributed to the Canadian Acquired Inventory,
which amount is 75% of the book value of such inventory, is to be paid by the Buyer
27
directly to BBGI upon conveyance of the Canadian Acquired Inventory in accordance with
the terms of the APA and the Stipulation.
7.0 LEASE REJECTION NOTICES
7.1 As described above, these CCAA Recognition Proceedings were commenced by way of a
recognition application under Part IV of the CCAA on September 14, 2020. It was
communicated to the Canadian Court and to counsel in attendance at that application that
BB Canada would be returning to the Canadian Court on an expedited basis to seek
recognition in Canada of the All Orders Order, which was anticipated to have been made
by the U.S. Court on or about September 24, 2020, and which is in part comprised of orders
dealing with the designation, assumption and/or rejection of Canadian real property leases.
These communications were consistent with the Initial Marotta Affidavit. At the hearing,
certain landlords’ counsel requested that language be added to the Canadian Court’s
endorsement that expressly provides that Canadian landlords are to receive thirty days’
notice of the rejection of a lease and that rent is to be paid during such thirty-day period.
This language was reflected in the Canadian Court’s endorsement in connection with the
application.
7.2 As there were no objections filed to the All Orders Order, the U.S. Court granted such order
on September 18, 2020, without the need for a hearing. Accordingly, the Chapter 11
Debtors were put in a position in which they could seek recognition in Canada of such
order on an earlier date than they had previously anticipated.
7.3 Following the entry of the All Orders Order by the U.S. Court, and in anticipation of such
order being recognized in Canada by the Canadian Court at the hearing scheduled for
28
September 25, 2020, on September 19, 2020, the Chapter 11 Debtors issued lease rejection
notices to all of BB Canada’s landlords in connection with their Canadian real property
leases at the direction of the Buyer and in accordance with the APA. The issued lease
rejection notices provide for thirty days’ notice of a lease rejection and for the payment of
rent during such period, which is customary in Canada and is consistent with the
endorsement of the Canadian Court. This treatment is also largely consistent with, and
does not substantially depart from, the effective treatment that landlords would receive
under plenary proceedings under the CCAA.
8.0 ACTIVITIES OF THE INFORMATION OFFICER
8.1 The activities of the Information Officer to date have included:
(a) reviewing relevant materials filed in the Chapter 11 Cases and drafts of the
application materials for the CCAA Recognition Proceedings;
(b) establishing the Case Website for the CCAA Recognition Proceedings at
www.alvarezandmarsal.com/BrooksBrothersCanada to make available copies of
the orders granted in the proceedings and other relevant motion materials and
reports. There is also a link on the Information Officer’s website to the Chapter 11
restructuring website maintained by Prime Clerk that includes copies of the U.S.
Court materials and orders, petitions and notices and other materials relevant to the
Chapter 11 Cases;
(c) coordinating the publication of notices of the CCAA Recognition Proceedings in
The Globe and Mail (National Edition) on September 18 and 25, 2020;
(d) obtaining a security review;
29
(e) reviewing matters related to the Sale Transaction;
(f) reviewing and considering the orders made in the Chapter 11 Cases that are the
subject of the All Orders Order;
(g) monitoring the Prime Clerk case website for activity in the Chapter 11 Cases;
(h) communicating with the Chapter 11 Debtors’ Canadian legal counsel and other
advisors regarding matters relevant to the CCAA Recognition Proceedings and the
Chapter 11 Cases; and
(i) with the assistance of legal counsel, preparing this First Report
9.0 A&M CANADA’S QUALIFICATIONS TO ACT AS INFORMATION OFFICER
9.1 A&M Canada assisted the BB Group to prepare for the CCAA Recognition Proceedings in
preparation for its role as the Information Officer. As such, the Information Officer is
familiar with the business and operations of the BB Group, and the key issues and
stakeholders in the Canadian proceedings.
9.2 A&M Canada is a trustee within the meaning of subsection 2(1) of the Bankruptcy and
Insolvency Act (Canada), has significant experience in connection with proceedings under
the CCAA, including but not limited to acting as information officer in the CCAA
recognition proceedings of Pier 1 Imports Inc., Jack Cooper Ventures Inc., Payless
Holdings LLC, Modular Space Corporation, LightSquared LP, Durabla Canada Ltd., TLC
Vision Corporation and Chemtura Canada Co./Cie.
9.3 A&M Canada is related to Alvarez & Marsal Holdings, LLC. Alvarez & Marsal Holdings,
LLC is an independent international professional services firm, providing, among other
30
things, bankruptcy, insolvency and restructuring services. The senior A&M Canada
professional personnel with carriage of this matter include experienced insolvency and
restructuring practitioners who are Chartered Professional Accountants and/or Chartered
Insolvency and Restructuring Professionals and Licensed Insolvency Trustees, and whom
have acted in cross-border restructurings and CCAA matters of a similar nature in Canada.
9.4 The Information Officer has retained Torys to act as its independent legal counsel.
10.0 RECOMMENDATIONS
10.1 The Information Officer understands that the recognition by the Canadian Court of the U.S.
Court’s All Orders Order and the balance of the relief sought by the Foreign Representative
is necessary for the conduct of the Restructuring Proceedings and that absent such
recognition and relief, the restructuring efforts of the Chapter 11 Debtors (including BB
Canada) would be impaired.
10.2 The Information Officer, together with its legal counsel, has reviewed the All Orders Order,
the underlying orders that are its subject matter and the balance of the relief sought by the
Foreign Representative, including the Sale Order and the Lease Rejection Procedures
Order, and is of the view that the granting of the Recognition, Approval and Vesting Order,
including, without limitation the provisions thereof that convey, and vest in the Buyer, the
Canadian Assets, is reasonable and appropriate in the circumstances. Based on the
foregoing, the Information Officer respectfully recommends that the Canadian Court grant
the relief requested by BBGI.
**********
Brooks Brothers Group, Inc.*† # (Delaware)
Brooks Brothers Singapore Pte. Ltd
(Singapore)
696 White Plains Road, LLC *† #
(New York)
Brooks Brothers France SARL
Deconic Group LLC (Delaware)
(Delaware)
(Virginia)
(Delaware)
(Hong Kong)
Brooks Brothers Macau Limited (Macau)
Brooks Brothers Greater China Limited (Hong Kong)
Brooks Brothers Australia Pty Limited (Australia)
Brooks Brothers India Private Limited
(India)
Brooks Brothers UK Limited
Brooks Brothers Canada Ltd.*
• † = Obligor Under the Debtors’ Prepetition Term Loan Facility
• # = Obligor Under Debtors’ Proposed DIP Facility
60.0%
99.9%
99.8%
Case 20-11785-CSS Doc 38 Filed 07/08/20 Page 37 of 37
Appendix “B”
Descriptions of Certain Orders Included in the All Orders Order
a) Order Authorizing Retention and Appointment of Prime Clerk as Claims and
Noticing Agent (the “Noticing Agent Order”). The Noticing Agent Order, inter
alia, authorized the Chapter 11 Debtors to retain and appoint Prime Clerk as claims
and noticing agent in the Chapter 11 Cases.
b) Order (I) Authorizing Debtors to Redact Certain Personal Identification
Information in Creditor Matrix and Certain Other Documents and (II) Granting
Related Relief (the “Redaction Order”). The Redaction Order, inter alia,
authorized the Chapter 11 Debtors to redact in their creditor matrix and certain other
documents filed in the Chapter 11 Cases personal identification information for
individual creditors.
c) Interim and Final Orders Establishing Notification Procedures and Approving
Restrictions on Certain Transfers of Interests In and Claims Against the Debtors
and Certain Worthless Stock Deduction Claims (together, the “Equity Trading
NOL Orders”). The Equity Trading NOL Orders, inter alia, established certain
notice and hearing procedures that must be satisfied before certain shareholders
may make transfers of, or worthlessness deductions with respect to, Class A
common stock and Class B Redeemable common stock in BBGI, and directed that
any transaction in respect of Class A common stock and Class B Redeemable
common stock shall be null and void ab initio in order to permit the Initial Chapter
11 Debtors to maintain certain tax attributes.
d) Interim and Final Orders (I) Approving Debtors’ Proposed Form of Adequate
Assurance of Payment to Utility Providers, (II) Establishing Procedures for
Determining Adequate Assurance of Payment for Future Utility Services, (III)
Prohibiting Utility Providers from Altering, Refusing, or Discontinuing Utility
Service, (IV) Authorizing the Debtors to Honor Obligations to Payment Processor
in the Ordinary Course of Business, and (V) Granting Related Relief (together, the
“Utilities Orders”). The Utilities Orders, inter alia, prohibited the Initial Chapter
11 Debtors’ utility companies, including those located in Canada, from altering,
refusing or discontinuing service, approved a deposit in the amount of $370,000 as
adequate assurance of postpetition payment to utility companies, established
procedures to resolve subsequent requests for additional assurance of payment, and
authorized the payment of any prepetition service fees to the payment processor in
an amount not to exceed $5,000.
e) Interim and Final Orders (I) Authorizing Debtors to (A) Pay Prepetition Wages,
Salaries, Reimbursable Expenses, and Other Obligations on Account of
Compensation and Benefits Programs and (B) Continue Compensation and
Benefits Programs and (II) Granting Related Relief (the “Interim Wages Order”
and the “Final Wages Order”, respectively and together, the “Wages Orders”).
The Interim Wages Order, inter alia, authorized aggregate payments of up to $3.1
million for various prepetition workforce obligations or for the benefit of the
workforce under the various workforce programs. The Final Wages Order
increased such authorized aggregate payments to $4.7 million. The Wages Orders
also authorized the Initial Chapter 11 Debtors to continue to administer in the
ordinary course of business, and to modify, change and discontinue, any of their
compensation and benefits programs, and to implement new such programs.
f) Interim and Final Orders (I) Authorizing Debtors to Pay Certain Prepetition
Vendor Claims and Lien Claims, (II) Confirming Administrative Expense Priority
of Undisputed Outstanding Prepetition Orders, and (II) Granting Related Relief
(the “Interim Critical Vendor Order” and the “Final Critical Vendor Order”
respectively). The Interim Critical Vendor Order, inter alia, authorized the Initial
Chapter 11 Debtors to pay amounts in full or partial satisfaction of (a) non-priority
undisputed, liquidated, prepetition claims held by vendors designated by the Initial
Chapter 11 Debtors as “critical”, provided no such amount exceeds $6.5 million,
increased to $14.6 million in the Final Critical Vendor Order; and (b) undisputed,
liquidated, prepetition amounts held by lienholders, provided no such amount
exceeds $3.3 million, increased to $3.8 million in the Final Critical Vendor Order.
The Final Critical Vendor Order also establishes certain procedures in respect of
these parties and the payment thereto.
g) Interim and Final Orders Authorizing Debtors to (I) Pay Certain Prepetition Taxes
and Fees, (II) Granting Related Relief (the “Interim Prepetition Tax Order” and
the “Final Prepetition Tax Order”, respectively, and together, the “Prepetition
Tax Orders”). The Interim Prepetition Tax Order, inter alia, authorized the Initial
Chapter 11 Debtors to pay certain taxes and fees accrued or incurred prepetition up
to an aggregate amount of $2.5 million. The Final Prepetition Tax Order increased
this aggregate amount to $2.6 million. The Prepetition Tax Orders also authorized
the Initial Chapter 11 Debtors to maintain certain tax payments to avoid disruption
to business operations.
h) Interim and Final Orders (I) Authorizing Debtors to (A) Maintain and Administer
Prepetition Customer Programs, Promotions, and Practices, (B) Pay and Honor
Related Prepetition Obligations, and (II) Granting Related Relief (together, the
“Customer Programs Orders”). The Customer Programs Orders, inter alia,
authorized the Initial Chapter 11 Debtors to maintain their customer programs,
satisfy certain prepetition obligations related thereto and maintain accounts relating
to the payment of obligations thereof.
i) Interim and Final Orders (I) Authorizing Debtors to (A) Continue to Maintain Their
Insurance Policies and Programs and Surety Bond Program, and (B) Honor All
Insurance Obligations, (II) Modifying the Automatic Stay, and (III) Granting
Related Relief (the “Interim Insurance Order” and the “Final Insurance Order”
respectively, together, the “Insurance Orders”). The Interim Insurance Order,
inter alia, authorized the Initial Chapter 11 Debtors to pay prepetition claims to a
maximum of $326,000 arising under their ordinary course insurance and bonding
programs, increasing to all insurance obligations in the Final Insurance Order. The
Insurance Orders also authorized the Initial Chapter 11 Debtors to maintain, renew,
and supplement such programs in the ordinary course postpetition. The Final
Insurance Order also authorized the Initial Chapter 11 Debtors to continue their
surety bond program in the ordinary course of business, provided that the Initial
Chapter 11 Debtors deliver five days’ notice to the Official Committee of
Unsecured Creditors prior to posing any collateral in an amount exceeding $1
million.
j) Order Authorizing and Establishing Procedures for the Sale, Transfer, or
Abandonment of De Minimis Assets (the “De Minimis Assets Sale Order”). The
De Minimis Assets Sale Order, inter alia, authorized the Initial Chapter 11 Debtors
to sell, transfer or abandon certain of the Chapter 11 Debtors’ assets that are of a de
minimis value compared to the Chapter 11 Debtors’ total assets and established
procedures to effect such activities. The purchase price of the assets for any such
sale under the De Minimis Assets Sale Order may not exceed $2.5 million, nor may
the value of any abandoned assets exceed $500,000.
k) Order Authorizing Employment and Retention of Prime Clerk LLC as
Administrative Advisor Nunc Pro Tunc to the Petition Date (the “Prime Clerk
Retention Order”). The Prime Clerk Retention Order authorizes the Chapter 11
Debtors to retain Prime Clerk LLC as administrative advisor in the Chapter 11
Cases.
l) Order Authorizing Retention and Employment of Weil, Gotshal & Manges LLP as
Attorneys for Debtors Nunc Pro Tunc to Petition Date (the “WGM Retention
Order”). The WGM Retention Order authorizes the Chapter 11 Debtors to retain
Weil, Gotshal & Manges LLP as their attorneys in the Chapter 11 Cases.
m) Order (I) Authorizing Employment and Retention of Malfitano Advisors, LLC as
the Debtors’ Retail Restructuring Advisor and Consultant Nunc Pro Tunc to the
Petition Date, and (II) Granting Related Relief (the “Malfitano Retention
Order”). The Malfitano Retention Order authorizes the Chapter 11 Debtors to
retain Malfitano Advisors, LLC as their retail restructuring advisor and consultant
in the Chapter 11 Cases.
n) Order (I) Authorizing Debtors to Employ Professionals Utilized in the Ordinary
Course of Business and (II) Granting Related Relief (the “Ordinary Course
Professionals Order”). The Ordinary Course Professionals Order, inter alia,
authorized the Chapter 11 Debtors to retain, compensate and reimburse
professionals in the ordinary course of business and establishes procedures for the
Chapter 11 Debtors doing so.
o) Order Authorizing Debtors to Retain Ankura Consulting Group, LLC to Provide a
Chief Restructuring Officer, Restructuring Officer, and Certain Additional
Personnel to the Debtors Nunc Pro Tunc to the Petition Date (the “Ankura
Retention Order”). The Ankura Retention Order authorizes the Chapter 11
Debtors to retain Ankura for the purpose of providing the Chapter 11 Debtors with
a Chief Restructuring Officer, Restructuring Officer and other supporting personnel
in the Chapter 11 Cases.
p) Order (I) Establishing Procedures for Interim Compensation and Reimbursement
of Expenses of Professionals and (II) Granting Related Relief (the “Professional
Compensation Procedures Order”). The Professional Compensation Procedures
Order, inter alia, establishes the procedures by which the Chapter 11 Debtors may
make, and certain professionals may seek, interim payment of compensation and
reimbursement of expenses. Such professionals must file with the U.S. Court a
monthly application providing details of the services rendered or the expenses
incurred.
q) Order (I) Authorizing the Debtors to Retain and Employ PJ Solomon, L.P. and PJ
Solomon Securities, LLC as Investment Banker Effective as of the Petition Date,
and (II) Granting Related Relief (the “PJ Solomon Retention Order”). The PJ
Solomon Retention Order authorizes the Chapter 11 Debtors to retain PJ Solomon,
L.P. and PJ Solomon Securities, LLC as their investment banker in the Chapter 11
Cases.
r) Order Authorizing the Debtors to Retain and Employ Richards, Layton & Finger,
P.A. as Co-Counsel to the Debtors Effective as of the Petition Date (the “RLF
Retention Order”). The RLF Retention Order authorizes the Chapter 11 Debtors
to retain Richards, Layton & Finger, P.A. as their bankruptcy co-counsel in the
Chapter 11 Cases.
s) Order Authorizing Retention of FTI Consulting, Inc. as Financial Advisor for the
Official Committee of Unsecured Creditors Nunc Pro Tunc to July 27, 2020 (the
“FTI Retention Order”). The FTI Retention Order authorizes the Official
Committee of Unsecured Creditors of the Chapter 11 Debtors (the “Committee”)
to retain FTI Consulting, Inc. as the Committee’s financial advisor in the Chapter
11 Cases.
t) Order Authorizing the Employment and Retention of Troutman Pepper Hamilton
Sanders LLP as Co-Counsel to the Official Committee of Unsecured Creditors of
Brooks Brothers Group, Inc., et al., Nunc Pro Tunc to July 27, 2020 (the “TPHS
Retention Order”). The TPHS Retention Order authorizes the Committee to retain
Troutman Pepper Hamilton Sanders LLP as co-counsel to the Committee in the
Chapter 11 Cases.
u) Order Authorizing the Official Committee of Unsecured Creditors of Brooks
Brothers Group, Inc., et al. to Retain and Employ Akin Gump Strauss Hauer & Feld
LLP as Counsel, Effective Nunc Pro Tunc to July 24, 2020 (the “AGSHF Retention
Order”). The AGSHF Retention Order authorizes the Committee to retain Akin
Gump Strauss Hauer & Feld LLP as counsel to the Committee in the Chapter 11
Cases.
v) Order Determining That the Committee is Not Required to Provide Access to
Confidential or Privileged Information of the Debtors and Fixing Creditor
Information Sharing Procedures and Protocols Under 11 U.S.C. §§ 105(a), 107(b),
and 1102(b)(3) Effective as of July 21, 2020 (the “Committee Confidentiality
Order”). The Committee Confidentiality Order, inter alia, orders that the
Committee shall not be required to provide access to certain confidential or
privileged information of the Chapter 11 Debtors, or any other entity, to any
creditor with a claim of the kind represented by the Committee, except as explicitly
provided therein. This Order also establishes the protocol under which the
Committee is permitted to provide access to information for creditors.
w) Order Authorizing Debtors to Retain and Employ KPMG LLP to Provide Tax
Consulting and Tax Compliance Services Effective as of the Petition Date (the
“KPMG Retention Order”). The KPMG Retention Order authorizes the Chapter
11 Debtors to retain KPMG LLP to provide tax consulting and tax compliance
services in the Chapter 11 Cases.
IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF BROOKS BROTHERS GROUP, INC., BROOKS BROTHERS FAR EAST LIMITED, BBD HOLDING 1, LLC, BBD HOLDING 2, LLC, BBDI, LLC, BROOKS BROTHERS INTERNATIONAL, LLC, BROOKS BROTHERS RESTAURANT, LLC, DECONIC GROUP LLC, GOLDEN FLEECE MANUFACTURING GROUP, LLC, RBA WHOLESALE, LLC, RETAIL BRAND ALLIANCE GIFT CARD SERVICES, LLC, RETAIL BRAND ALLIANCE OF PUERTO RICO, INC., 696 WHITE PLAINS ROAD, LLC, AND BROOKS BROTHERS CANADA LTD.
APPLICATION OF BROOKS BROTHERS GROUP, INC. UNDER SECTION 46 OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED
Court File No.: CV-20-00647463-00CL
(Commercial List) Proceeding commenced at Toronto
FIRST REPORT OF THE INFORMATION OFFICER
Torys LLP 79 Wellington St. W., 30th Floor Box 270, TD South Tower Toronto, ON M5K 1N2 Fax: 416.865.7380
Tony DeMarinis (LSO #: 29451Q) Tel: 416.865.8162 | tdemarinis@torys.com
Adam Slavens (LSO #: 54433J) Tel. 416.865.7333 | aslavens@torys.com
Mike Noel (LSO #: 80130F) Tel: 416.865.7378 | mnoel@torys.com
Lawyers for the Applicant