SSG Capital Advisors served as the investment banker to Soft Surroundings Holdings in the sale of substantially all of its assets to an affiliate of Coldwater Creek and an affiliate of Gordon Brothers Group. The transaction closed in November 2023 pursuant to a Chapter 11 plan of reorganization in the U.S. Bankruptcy Court for the Southern District of Texas, Houston division.
Founded in 1999 and headquartered in St. Louis, Soft Surroundings is a lifestyle brand and omni-channel retailer of women’s apparel and accessories. The company’s products include branded dresses, tops, pants, shoes, bags and home goods sold through its catalog, ecommerce platforms and more than 40 retail locations.
The company has had a long history of growth and financial success. However, like many other retailers, macroeconomic conditions and high fixed costs have impacted margins over the last several years. In 2022, the company, with the support of operational advisors and a new executive management team, implemented a multifaceted cost savings and turnaround strategy that included closing underperforming retail locations and rationalizing the cost structure and inventory. Despite making significant improvements in profitability, a transaction would be needed to address liquidity and continue as a going concern.
SSG was retained in June 2023 to conduct a comprehensive marketing process and solicit interest from targeted strategic and financial investors. The company also sought interim funding to support the business and closed on a financing facility provided by an affiliate of Gordon Brothers in July 2023. Multiple interested parties submitted offers to acquire all or a portion of the company’s business. Upon review, it was determined that a partnership between Gordon Brothers and a strategic acquirer would maximize value of both the direct-to-consumer business and the brick-and-mortar assets. SSG facilitated an introduction between Coldwater Creek and Gordon Brothers and after several weeks of arm’s length negotiations, the parties put forth a solution that garnered the support of the company’s key stakeholders and creditors. In September 2023, the company entered into a Restructuring Support Agreement (RSA) and filed for protection under Chapter 11 of the U.S. Bankruptcy Code. The centerpiece of the transaction was the sale and transfer of the direct-to-consumer business to Coldwater Creek and a simultaneous sale of the remaining brick-and-mortar assets to Gordon Brothers for an orderly wind-down. The transaction was effectuated via a plan of reorganization that was confirmed by the Bankruptcy Court and closed in November 2023.
SSG’s special situations expertise, significant experience in the consumer products and retail sectors and ability to run a robust marketing process in a highly expedited time frame driven by liquidity constraints, generated multiple alternatives for the company and a successful outcome. The RSA and ensuing sale resulted in a value maximizing transaction that provided for payment in full of all administrative claims, maintained the Soft Surroundings brand and preserved the company’s online / catalog business as a going concern.
