Daily News: January 17, 2019

Gymboree Declares Bankruptcy, Receives DIP Financing from Goldman Sachs


Children’s specialty retailer Gymboree and its U.S. subsidiaries voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia. Additionally, the company’s Canadian subsidiary intends to seek protection in proceedings pursuant to the Bankruptcy and Insolvency Act of Canada (BIA) in the Ontario Superior Court of Justice.

The company also entered into an asset purchase agreement with Goldman Sachs affiliate Special Situations Investing Group (SSIG), in which SSIG will serve as the stalking-horse bidder in a court-supervised Section 363 sale for the Janie and Jack subsidiary. As part of the deal, SSIG agreed to acquire the Janie and Jack business and the intellectual property and online platform for Gymboree.

Gymboree intends to use these proceedings to facilitate an orderly wind-down of all of its Gymboree and Crazy 8 store locations and operations, while continuing to pursue a going-concern sale of the Janie and Jack business.

Goldman Sachs Specialty Lending and SSIG agreed to provide $30 million in debtor-in-possession financing to support the company through this process. Gymboree also received a “roll up” commitment of all its obligations under its pre-petition term loan credit agreement in an amount of not less than $89 million.

Shaz Kahng, appointed in November 2018 as Gymboree Group CEO, said, “The company has worked diligently in recent months to explore options for Gymboree and its brands, and we are saddened and highly disappointed that we must move ahead with a wind-down of the Gymboree and Crazy 8 businesses. At the same time, we are focused on using this process to preserve the Janie and Jack business – a strong brand that is poised to grow – by pursuing a sale of the business as a going concern. As we move ahead, we are working to minimize the impact on our employees, customers, vendors and other stakeholders.”

All Gymboree, Janie and Jack and Crazy 8 stores and online platforms are currently open and continue to serve customers. The company will provide an update on plans for its Janie and Jack stores as the sale process progresses, along with more details about the plans for its Gymboree and Crazy 8 going out of business sales in the near term.

Gymboree Play & Music, a separate entity, is not included in the court proceedings.

Milbank, Tweed, Hadley & McCloy is serving as Gymboree’s legal counsel, Berkeley Research Group as its restructuring advisor and Stifel, Nicolaus & Co. and Miller Buckfire & Co as its financial advisor. Norton Rose Fulbright Canada is counsel to Gymboree Canada, while KPMG acts as proposal trustee, with representation by Osler, Hoskin & Harcourt.