Gymboree filed with the U.S. Bankruptcy Court a First Amended Joint Chapter 11 Plan of Reorganization and related Disclosure Statement.
According to the Disclosure Statement, “If Class 5 votes to accept the Plan, then Holders of General Unsecured Claims will receive their Pro Rata share of $500,000; or if Class 5 votes to reject the Plan, then Holders of General Unsecured Claims will not be entitled to any recovery on account of such Claims….Preserving Gymboree’s tax attributes, including approximately $18.3 million of state net operating losses (‘NOLs’) as of January 31, 2017, expected additional federal and state NOLs in the current year, tax basis in assets and certain other attributes, is critical to any restructuring and was a component of the discussions with the Consenting Term Loan Lenders.”
In addition, “In particular, there is an estimated $500 million built-in loss in the stock of The Gymboree Corporation, which the Debtors plan to utilize, along with the NOLs, to offset gains expected to be triggered by the restructuring. So long as this built-in loss is available, the Debtors will be able to implement the Restructuring as a sale of subsidiary stock and/or assets to creditors which will preserve and potentially increase available tax basis in assets. This structure is expected to save the Reorganized Debtors between $55 and $65 million in cash taxes over the next five years.”
The Court subsequently approved the Disclosure Statement and scheduled a September 7, 2017 hearing to consider the First Amended Joint Chapter 11 Plan of Reorganization.
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