A Texas bankruptcy judge approved off-price retailer Tuesday Morning's request to convert its bankruptcy case to a Chapter 7 liquidation, making way for the retailer's exit as a viable company and leaving hundreds of empty stores in its wake.
The Dallas-based retailer also reached a $34.5 million agreement with its creditors, which was also approved by Judge Edward Morris in the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth division. In the approved settlement agreement, the retailer's creditors agreed to a $34.5 million settlement expected to be paid by a Chapter 7 trustee.
In the agreement filed with the bankruptcy court after months of negotiations, Tuesday Morning through the trustee will pay a total of $34.5 million to its creditors, including the TASCR parties and the Invictus parties. According to the court filing, various TASCR parties have agreed to a settlement of $9.5 million and the Invictus parties have agreed to a settlement of $25 million.
Cantor Fitzgerald Securities, the administrative agent that helped Invictus secure its debtor-in-possession financing to aid Tuesday Morning, was also awarded its interest expenses on the Invictus loan totaling $107,822.
The settlement agreement was reached with the help of a months-long mediation with Judge Mark Mullin and the parties involved told the judge they hope this will minimize costs tied to what is expected to be further litigation if the agreement was not approved by the bankruptcy court by Friday.
"Even if the debtors, the committee, or a Chapter 7 trustee prevail on any of the disputes, the professional fees incurred to reach that resolution could dwarf any benefit," according to the bankruptcy filing. "The expense, inconvenience, and delay this litigation brings with it will consume the corpus of the estates remaining for creditors and administrative claimants."
In Tuesday Morning's filing to convert its bankruptcy case to a Chapter 7 liquidation, a longtime bankruptcy attorney told CoStar News the company was telling all parties involved the company no longer had money to pay anyone moving forward as a viable entity. Prior to the bankruptcy judge approving the conversion of the case, Hilco's intellectual property arm had hoped to find a buyer for the retailer's brand, but a buyer has yet to emerge.
Recently, a Fort Worth-based real estate firm behind Tuesday Morning's former distribution buildings unveiled plans to redevelop the facilities and market them to a new industrial tenant. The upgrades to the 1.1 million square feet of space is expected to bring a large infill opportunity for an industrial user to Dallas-Fort Worth.