The U.S. Bankruptcy Court approved rue21’s expedited motion for a settlement agreement with CIT Group/Commercial Services (CIT).
As previously reported, “CIT alleges that as of the Petition Date, the Debtors were indebted to CIT in the amount of $16,660,657.27 and, that of that amount, $7,586,826.63 is entitled to administrative claim status….The Debtors have reached an agreement with CIT, one of their largest factoring companies, which will provide CIT’s factored client vendors with credit accommodations to enable such vendors to ship goods to the Debtors on terms more favorable to the Debtors.”
In addition, “The terms of the proposed settlement are as follows: The CIT Filed 503(b)(9) Claim will be fixed and allowed in an amount to be agreed upon between CIT and the Debtors prior to the entry of the 9019 Order, but in no event later than August 4, 2017, which amount will not exceed the amount of the CIT Filed 503(b)(9) Claim….Pursuant to existing authority under the 503(b)(9) Order, the Debtors paid to CIT $3,750,000 in partial satisfaction of the CIT Filed 503(b)(9) Claim on a dollar-for-dollar basis, and (ii) within 2 business days of the entry of the Order, the Debtors shall pay the balance of the CIT Allowed 503(b)(9) Claim to CIT in full and final satisfaction of the CIT Allowed 503(b)(9) Claim on a dollar-for-dollar basis….Absent expedited relief, the Debtors will not be able to obtain this additional trade credit until after the back to school season is over, and will have missed an excellent opportunity to strengthen their liquidity position in the lead up to the hearing on confirmation of the Plan scheduled for August 29, 2017.”
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