Main Case: In re: CWC Liquidation Inc. (f/k/a Coldwater Creek, Inc.) et al.; Bankr. Case No. 14-10867 (BLS)
Plaintiff: Peter Kravitz, as Liquidating Trustee of the CWC Creditors’ Liquidating Trust
On March 15, 2016, Peter Kravitz, as Liquidating Trustee (“Liquidating Trustee”) of the CWC Creditors’ Liquidating Trust filed 74 actions (the “Avoidance Actions”) pursuant to Sections 544, 547, 548 and 550 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”).
Coldwater Creek, Inc. (now CWC Liquidation Inc.) and its seven subsidiaries (collectively, the “Debtors”) operated as a multi-channel retailer that sold women’s apparel, accessories, and home decor through retail stores across the country, their catalog, and their e-commerce website. According to the Declaration of James A. Bell in Support of Voluntary Petitions, First Day Motions, and Applications [Docket No. 2], Coldwater reached a peak revenue of $1.1 billion in 2006, with a successful period of store growth from 198 stores in 2005 to 336 stores in 2007. Beginning in 2007, the economic downturn adversely affected the entire retail industry, including Coldwater, and from 2007 to 2011, the Debtors experienced multiple management changes and strategic shifts that, when combined with the Debtors’ unmet sales expectations, led to significant inventory buildup. From 2011 through 2013, the Debtors attempted a targeted turnaround process that ultimately led to a sale effort that failed due to lack of interest from potential buyers. After months of declining sales and failed out-of-court sales and refinancing processes, the Debtors determined that the best way to maximize value for the benefit of all interested parties was a prompt and orderly wind-down of their business.
On April 11, 2014 (the “Petition Date”), each of the Debtors filed voluntary petitions for relief under chapter 11 of the Bankruptcy Code. On the Petition Date, the Debtors submitted its initial proposed plan of liquidation (the “Liquidation Plan”) with the stated goal of the liquidation and conversion of all of the Debtors’ remaining assets to cash [Docket No. 15]. On September 17, 2014, the Bankruptcy Court entered an order (the “Confirmation Order”) [Docket No. 981] confirming the Modified Third Amended Joint Plan Of Liquidation Of Coldwater Creek Inc. And Its Debtor Affiliates Pursuant To Chapter 11 Of The Bankruptcy Code (the “Plan”). The Plan became effective on September 26, 2014 (the “Effective Date”) [Docket No. 1015].
Part of and in addition to the Liquidation Plan, the Debtors filed a motion seeking to commence rapid chain-wide store closing sales in order to quickly liquidate inventory, furniture, fixtures and equipment, and other assets [Docket No. 13].
The Liquidating Trust and the Avoidance Actions
In accordance with the Liquidation Plan and the Confirmation Order, the Liquidation Trust was established on the Effective Date of the Plan. Also on the Effective Date, as contemplated by the Plan and Confirmation Order, the Debtors and the Liquidating Trustee entered into the CWC Creditors’ Liquidating Trust Agreement (the “Liquidating Trust Agreement”).
Under the Plan and the Liquidating Trust Agreement, the Liquidating Trustee was appointed to administer the Liquidating Trust. Among other things, the Liquidation Trustee is authorized to prosecute and resolve Causes of Action (as defined in the Plan) on behalf of and in the name of the Debtors. [See Docket No. 981, Section IV.E].
With the April 14, 2016 statute of limitations looming, the Liquidating Trustee has commenced filing the Avoidance Actions. The substance of the Complaints reviewed thus far is somewhat standard. The Preference Period is identified as between January 11, 2014 and April 10, 2014 (the “Preference Period”). The Liquidating Trustee does assert fraudulent conveyance claims under Section 548 (and under state fraudulent transfer statutes through Section 544(b),) relying solely on the recitation of the statutory language, and seeks the disallowance of claims pursuant to Section 502(d) and (j). In addition to the specific Debtor that made the alleged transfers, the Liquidating Trustee’s Exhibit A attempts to identify check numbers, check amounts, and the clear date, as well as the specific invoice information.
The Honorable Brendan L. Shannon is presiding over the Debtors’ cases.
Prime Clerk, LLC is the claims agent for CWC Liquidation Inc.
R. Grant Dick IV