Retail Bankruptcy PDF

Retail Bankruptcy Enterprise Value and
Creditor Recoveries
Fitch Case Studies — 10th Edition
September 2016
Leveraged Finance
Corporates / U.S.A.
Retail Bankruptcy Enterprise Value and Creditor

Recoveries
Fitch Case Studies — 10th Edition
Special Report
Key Drivers of Default: Fitch Ratings analyzed 30 retail bankruptcies that collectively had
$10.5 billion of debt. Defaults resulted from shifts in consumer spending toward services and
This is an update of the special
experiences, increased discounter and online penetration, and declining mall traffic, all of which
report U.S. Retail Case Studies in have created a highly competitive retail environment. Retailers have also suffered from the ebb
Bankruptcy Enterprise Values and and flow of brand popularity. Negative comparable store sales (comps) and fixed-cost
Creditor Recoveries dated
April 16, 2013. This edition expands deleverage led to negative cash flow, tight liquidity and unsustainable capital structures.
the number of sector case studies
to 30 from 20. Liquidation More Prevalent in Retail: Half of retail bankruptcies (15 of 30 cases) were
resolved as liquidations, versus the 17% seen across corporates, with five cases sold as going
concerns and the remaining 10 emerging as independent going concerns. Retail bankruptcies
Disclaimer: Fitch cautions that often result from either competitors offering the same merchandise at a more attractive price
the case studies are not intended to
provide exact recovery outcomes or (or with a better experience), or from brand degradation (particularly in apparel). These issues
legal opinions. Estimates in this limit retailers’ value as going concerns.
report may vary from final case
outcomes. Impediments to Continued Operation: Heightened competition yielding permanent traffic
decline, an inability to improve positioning due to negative FCF and a somewhat weak position
in bankruptcy proceedings relative to landlords and vendors can inhibit bankrupt retailers from
emerging as going concerns. The grocery sector was the exception in Fitch’s analysis, where
five of six cases emerged as operating businesses due to strong real estate positions in local
Related Research
Fitch U.S. High Yield Default Insight
markets.
(YTD Default Total Surpasses
$60 Billion As August Slowdown Lower Going Concern Multiples: The median enterprise value/EBITDA multiple for 11
Short-Lived) (September 2016)
retailers that emerged as going concerns was 5.4x. This is somewhat lower than the 6.0x
U.S. Leveraged Loan Default Insight
(Energy Looms Large Among Fitch’s cross-sector median.
Loans of Concern) (August 2016)
Fitch 50 (Capital Structure Diagrams Outstanding Secured Debt Recoveries: All but one of Fitch’s 30 case studies showed
& Debt Document Summaries for outstanding recoveries for first-lien claims, generally due to overcollateralized asset-backed
Fifty of the Largest U.S. Leveraged
Credits) (July 2016) loan (ABL) facilities, with balances limited under a working capital-focused borrowing base.
High-Yield Retail Checkout ABL holders were generally paid in cash, often shortly following the filing date. Unsecured
(Comprehensive Analysis of Major
High-Yield Retailers) (January 2016) claims had below-average recoveries (25% average), due to high revolver borrowings,
Evaluating Asset-Based Lending constrained multiples, significant administrative claims and large lease rejection claims.
Facilities (Recovery Outcomes and
Analysis for ABL-Inclusive Capital Retailers Currently at Risk: Fitch screened the high-yield bond and leveraged loan universe
Structures) (August 2015)
Healthcare, Food, Beverage and as of Aug. 31, 2016 to identify seven U.S. retailers with significant default risk within the next
Consumer Bankruptcy Enterprise 12–24 months. These at-risk retailers included Sears Holdings Corporation, Claire’s Stores, Inc.
Value and Creditor Recoveries
(Fitch Case Studies — Edition VIII) (which recently completed a debt exchange), True Religion Apparel, Inc., 99 Cents Only Stores
(August 2015)
LLC, Nebraska Book Company, Inc., Nine West Holdings, Inc. and Rue21, Inc.
Analysts
Sharon Bonelli
+1 212 908-0581
sharon.bonelli@fitchratings.com
David Silverman
+1 212 908-0840
david.silverman@fitchratings.com
www.fitchratings.com September 28, 2016

Leveraged Finance
Table of Contents
Drivers of Default ................................................................................................................ 3
Liquidation Outcomes More Prevalent in Retail .................................................................. 4
Going Concern Case Studies ............................................................................................. 6
Liquidation Case Studies .................................................................................................... 9
Retail Recovery Rates ...................................................................................................... 14
Retailers in Chapter 11 ..................................................................................................... 17
Retailers at Risk of Default ............................................................................................... 18
Sector Default Rate .......................................................................................................... 18
Appendix: Concession Payments (Settlement Distributions) ............................................ 19
Case Studies
ALCO Stores, Inc. ............................................................................................................. 21
American Apparel, Inc. ..................................................................................................... 24
BI-LO, LLC ....................................................................................................................... 27
The Bombay Company ..................................................................................................... 30
Borders Group Inc. ............................................................................................................ 33
Brookstone, Inc. ................................................................................................................ 36
BSCV, Inc. (formerly Boscov’s Inc.) .................................................................................. 39
Circuit City Stores, Inc. ..................................................................................................... 42
Coldwater Creek Inc. ........................................................................................................ 45
Eddie Bauer Holdings, Inc. ................................................................................................ 48
Fairway Group Holdings Corp. ......................................................................................... 51
Finlay Enterprises, Inc. ..................................................................................................... 54
Goody’s, LLC .................................................................................................................... 57
Gottschalks, Inc. ............................................................................................................... 60
The Great Atlantic and Pacific Tea Company, Inc. ........................................................... 63
Harry & David Holdings, Inc. ............................................................................................ 67
Hub Holdings Corp. (formerly Anchor Blue Retailing Group, Inc.) .................................... 70
Linens ‘n Things, Inc. ........................................................................................................ 73
Loehmann’s Holdings Inc. (2010) ..................................................................................... 76
Loehmann’s Holdings Inc. (2013) ..................................................................................... 79
Movie Gallery Inc. ............................................................................................................. 82
Orchard Supply Hardware Stores Corporation ................................................................. 85
Penn Traffic Company (2003) .......................................................................................... 88
Related Criteria Penn Traffic Company (2009) .......................................................................................... 91
Recovery Rating and Notching
Criteria for Non-Financial Corporate Quiksilver, Inc. .................................................................................................................. 94
Issuers (April 2016)
RadioShack Corporation .................................................................................................. 97
Syms Corp., Filene’s Basement, LLC ............................................................................. 100
Value City Holdings, Inc. ................................................................................................ 103
The Wet Seal, Inc. .......................................................................................................... 106
Winn-Dixie Stores, Inc. ................................................................................................... 109
Retail Bankruptcy Enterprise Value and Creditor Recoveries 2

September 28, 2016
Leveraged Finance
Drivers of Default
Fitch analyzed 30 recent bankruptcies in the retail sector. While bankruptcy has resulted from a
variety of operating concerns, several themes have emerged as key sources of pressure for
companies.
Key Drivers of Retail Rise of Discounter Competition

Defaults
Discount formats, including supercenters, off-price, dollar stores and hard discounters, have
• More Discounter
Competition taken significant share over the past two decades. While discounter inventory spans many
• Rising Online Penetration categories, the rise of the discounter industry has most significantly impacted general
• Declining Mall Traffic merchandise and grocery retailers. As a result, the grocery industry is one of the most
• Spending Shift Towards represented subsectors in Fitch’s 30-company bankruptcy analysis.
Intangibles
Increased Online Penetration

E-commerce penetration of retail sales (excluding auto and gas) has risen rapidly in recent
years, increasing to 10% in 2015 from approximately 5% of sales in 2010. Fitch expects online
penetration to expand further, potentially to the 15%–17% range by 2020. This suggests that
half of retail sales growth is expected to come online, as opposed to physical retail locations.
Rapid online growth, particularly from value-oriented players such as Amazon.com, Inc. have
pressured sales and pricing power at bricks-and-mortar retailers.
Declining Mall Traffic

Consumers are spending less discretionary time shopping at enclosed malls, concurrent with a
rise in time spent on other leisure activities, such as travel, entertainment and physical activity.
Less time spent at malls, especially weaker-tenanted malls with less attractive environments,
has pressured sales of apparel and accessories. This factor has exacerbated brand declines at
a number of mall-based retailers and is expected to lead to further defaults.
Shift in Spending to Intangible Categories

Fitch has seen a shift in discretionary spending away from traditional categories, such as
apparel, home furnishings and consumer electronics, and toward services and experiences like
travel, eating out, entertainment and health-oriented activities (i.e. gyms and spas).
Compounding this issue has been a general increase in spending on housing and healthcare
due to rising costs in both arenas. These trends have conspired to limit discretionary spend on
the tangible goods sold by many retailers.

September 28, 2016
Leveraged Finance
Liquidation Outcomes More Prevalent in Retail
A retailer went through liquidation in 15 out of Fitch’s 30 case studies. The 50% rate is higher
than the 17% average seen across 214 Fitch bankruptcy case studies across the U.S.
corporate space.
Bankrupt Retailers Often Lack “Reason to Exist”

Retail bankruptcies result in liquidation for several reasons. The lack of proprietary products in
many categories leaves retailers vulnerable to permanent traffic decline resulting from the rise
of competitors (for example, discounters and online-only players). In addition, retail brand
values (particularly mall-based apparel brands) can become irrelevant due to the changing
tides of consumer sentiment. The outcome in either case is that the bankrupt retailer has lost
its place in the market and thus has limited value as a going concern.
Increased competition can cause declines in comps, which yield fixed-cost deleverage and
• Retailer bankruptcies end in
liquidation more often than EBITDA declines. Retailers often respond to declines by cutting back spending on in-store
other corporate cases. maintenance, labor and marketing. These actions can exacerbate market share erosion
through declines in the in-store experience. Severe or persistent market share contraction can
lead to weak or negative FCF, which limits the ability to improve competitive position, creating
a downward spiral of operations and results.
Ultimately, bankrupt retailers are liquidated if they cannot access new capital to reorganize as
going concerns. Investors may be reluctant to invest new capital due to the lack of proprietary
products. In other words, increased competition and changing consumer behavior have left
these retailers with little reason to exist in the marketplace. Investors may also perceive that a
fallen retail brand (often in mall-based specialty apparel) has little chance of regaining favor in
the customer’s eye, yielding poor risk/return characteristics in a potential investment.
Liquidations
Company Type
ALCO Stores, Inc. Broadline
Bombay Company (The) Home Furnishings
Borders Group Inc. Operator of Book, Movie and Music Stores
Circuit City Stores, Inc. Consumer Electronics
Coldwater Creek Inc. Women’s Apparel and Accessories
Finlay Enterprises, Inc. Jewelry
Goody’s, LLC Family Clothing
Gottschalks, Inc. Department Stores
Linens ‘n Things, Inc. Home Textiles
Loehmann’s Holdings Inc. (2013) Discount Apparel
Movie Gallery Inc. Video Rental And Sales
Penn Traffic Company (2009)a Supermarkets
RadioShack Corporation Electronics
Syms Corp., Filene’s Basement, LLCb Family Clothing
Value City Holdings, Inc. Department Stores
a
Penn Traffic (2009) sold all assets. The acquirer operated some markets. bSyms ceased to operate as a retailer, but
reorganized as an owner of real estate assets.
Source: Company disclosure statements, Fitch Ratings.

September 28, 2016
Leveraged Finance
Bankruptcy Code Changes Present Additional Challenges to
Reorganization
Certain changes in the Chapter 11 code initiated in October 2005 present further obstacles to
retailers seeking to reorganize and can dilute unsecured claim recoveries. In particular, the
tightening of deadlines for assuming or rejecting store leases and administrative claim
treatment for goods received within 20 days of the bankruptcy filing date are challenges.
Twenty-seven of the 30 bankruptcy petitions for the cases that Fitch analyzed were filed after
the 2005 changes to the code. These 27 provide a better indicator of the environment that will
prevail in future cases absent any further changes to the code than older cases, in Fitch’s view.
The shortening of lease assumption/rejection decision deadlines can be problematic for several
reasons. From a human resources perspective, a large chain with an extensive store network
could have hundreds of executory contracts to review. In addition, some retailers may want to
keep stores open through the next December/holiday selling season to assess performance,
and a shortened deadline may prevent this opportunity.
Prior to the reforms resulting from the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005, debtors had 60 days from filing for Chapter 11 to assume or reject a lease.
However, despite the 60-day official limit, in practice, bankruptcy courts would routinely grant
repeated extensions that provided the retailers two years or more to determine what to do with
a lease. This extended time enabled retailers to operate stores for at least one Christmas
season — and possibly two — during bankruptcy, as was the case with Federated Department
Stores in the early 1990s. This lengthy decision period was unpopular with property owners,
who successfully lobbied for shorter decision times that became effective with the 2005 reforms.
The 2005 reforms limited the debtor’s decision period to 210 days (with court consent) to
assume or reject a lease. However, in practice, the decision period is often even shorter
because of limits placed on the company by the DIP lender. The lenders want to ensure they
have adequate time to conduct a routine going-out-of-business (GOB) sale (rather than a fire
sale) if the reorganization does not pan out as planned. Lenders sometimes impose deadlines
of 150 days for completion of store lease decisions in the DIP agreement, which places even
more time pressure on the retailer.
The 2005 code revisions also included vendor-friendly changes to claims treatment for goods
received by the company within 20 days of bankruptcy. Dilution of unsecured creditor
recoveries result from certain vendor claims moving up in rank to administrative status, known
as a 503(b)(9) claim. A supplier can make such a claim for the value of goods received by the
debtor within 20 days of the bankruptcy filing date.
A supplier can also make a reclamation demand for delivered goods received by the bankrupt
company within 45 days of the bankruptcy filing, but in many instances the goods will already
have been sold.
Because Chapter 7 liquidations include trustee fees (usually 3% of liquidation proceeds), they
are rarely the option that maximizes creditor recoveries and infrequently used. Most often,
large U.S. companies reorganize in bankruptcy. When they do go out of business, liquidation
under Chapter 11 is more common than Chapter 7.
Valuation estimates in GOB sales were more challenging for Fitch than going concern cases,
where the third-party fundamental enterprise value estimate used in the plan of reorganization
was available as an exhibit in the disclosure statement. For the GOB liquidations, Fitch used a
rough estimate of the sum of creditor distributions or the sum of liquidation proceeds as a proxy
for the recovery values in the liquidations.

September 28, 2016
Leveraged Finance
Going Concern Case Studies
Grocer Real Estate Drives Going Concern Exits

Supermarket chains have been susceptible to bankruptcy given the onslaught of discount and
other competition, weak local market shares and razor-thin margins. A number of companies
have repeatedly filed for bankruptcy, including Penn Traffic (1999, 2003 and 2009), Grand
Union Company (1995, 1998 and 2000), Eagle Food Centers (2000 and 2003), Harvest Foods
(1994 and 1996), A&P (2010 and 2015) and Homeland Holdings Corp. (1996 and 2001).
Despite the challenges facing supermarkets, bankrupt grocers often have strong, entrenched
real estate positions in local markets. New capital, finding these real estate assets to be a
competitive advantage, has been more willing to fund grocer post-emergence liquidity and
operating needs than in other retail subsectors.
Five of the six completed supermarket case studies reorganized as going concerns. The sixth
case study, Penn Traffic Company (2009), has been classified as a liquidation, although some
of firm’s stores were sold to Tops Markets for $85 million and continued to be operated as
grocers. The Great Atlantic and Pacific Tea Company (A&P) chain reorganized as a going
concern in 2010 but filed again in 2015 and is in a liquidation process. Final recoveries of A&P
creditors are not yet determined.
Company-Specific Drivers
The remaining going concern case studies were more driven by an individual company’s ability
to find new capital than a broader theme.
Quiksilver, Inc. and American Apparel, Inc. are two recent examples of retailers that were able
to source new-money investment while in Chapter 11 and therefore survive as independent
going concerns. Quiksilver filed and emerged in 2016 after getting a new-money equity
investment from Oaktree. Funding for the bankruptcy plan included proceeds from a
$127.5 million rights offering for the new equity. In American Apparel’s case, several creditors
agreed to provide new equity capital in an amount ranging from $10 million to $40 million and
also agreed to provide a new exit term loan.
Harry & David Holdings, Inc. and Loehmann’s Holdings Inc. (2010) are two more retailers in the
Fitch study that survived bankruptcy and emerged independently. Harry & David obtained new
equity investment from a subset of noteholders, and Loehmann’s obtained a $25 million new
equity investment from its prepetition equity owner in return for 49% of the new equity. The
balance of Loehmann’s new equity shares was distributed to prepetition creditors in a debt-to-
equity conversion. However, Loehmann’s filed again in 2013 and liquidated in that bankruptcy.

September 28, 2016
Leveraged Finance
Retailers and Supermarkets that Continued as Going Concerns

Bankruptcy
Name Filing Date Type Outcome
American Apparel, Inc. 2/5/16 Basic Apparel Reorganized as independent
company.
Boscov’s Inc. 8/4/08 Department Stores Sold as going concern.
Brookstone, Inc. 7/8/14 Specialty Retailer Sold as a going concern.
Eddie Bauer Holdings, Inc. 6/17/09 Specialty Clothing Retail Sold as going concern.
Harry & David Holdings, Inc. 3/28/11 Specialty Retailer of Fruit Reorganized as independent
and Other Foods company.
Hub Holdings (formerly Anchor Blue) 5/27/09 Specialty Casual Apparel Sold Levi’s outlet business,
Chain liquidated Anchor Blue division.
a
Loehmann’s Holdings Inc. 11/15/10 Off-Price Specialty Retail Reorganized as independent
company.
Orchard Supply Hardware 2/24/14 Hardware Sold as a going concern after
Stores Corp. some store closings.
Quiksilver, Inc. 2/11/16 Apparel Manufacturer and Reorganized as independent
Retailer company.
Wet Seal Inc. (The) 10/30/15 Fast Fashion Retail for Sold remaining stores as a
Teens and Young Women going concern after significant
store closings.
BI-LO, LLC 3/23/09 Supermarkets Reorganized as independent
company.
Fairway Group Holdings Corp. 7/6/16 Supermarkets Reorganized as independent
company.
b
Great Atlantic and Pacific Tea 12/12/10 Supermarkets Reorganized as independent
Company (The) company.
Penn Traffic Company (2003) 5/30/03 Supermarkets Reorganized as independent
company.
Winn-Dixie Stores, Inc. 2/21/05 Supermarkets Reorganized as independent
company.
Source: Company disclosure statements, Fitch Ratings. aFiled again in 2013 and liquidated. bFiled again in 2015, with
liquidation in process.
Other non-supermarket retail companies that continued as going concerns were sold to new
owners as operating chains. The Wet Seal, Inc., a fast fashion retail chain, filed in 2016 and
emerged as a smaller going concern entity. Just prior to filing, the chain shuttered 337 stores.
The remaining 173 stores were acquired in a credit bid by Mador Lending, LLC, an affiliate of
Verso Capital Management.
Earlier cases of going concern sales include Eddie Bauer Holdings, Inc., Hub Holdings Corp.,
Boscov’s Inc., Brookstone, Inc. and Orchard Supply Hardware Stores Corporation. Eddie
Bauer sold all assets to Golden Gate Capital in a bankruptcy court-supervised auction one
month after its June 2009 bankruptcy filing. Hub Holdings (formerly known as Anchor Blue
Retailing Group, Inc.) sold its Levi’s outlet division to an affiliate of Levi Strauss & Co. and
liquidated its Anchor Blue division.
Boscov’s was able to obtain new capital investment from the founding family. The family
repurchased the company in bankruptcy with a new investment and paid prepetition secured
creditors in full. Boscov’s shut 10 under-performing stores during the bankruptcy and emerged
with a smaller base of 39 department stores. Brookstone was sold to an affiliate of Spencer
Spirit Holdings (Spencer’s), while Orchard sold 70 of its approximately 90 stores to Lowe’s
Corporation.

September 28, 2016
Leveraged Finance
Observed Valuations at Upper End of Estimated Range
For going concern case studies, fundamental estimates of reorganization enterprise value (EV)
or the negotiated settlement company values used in bankruptcy reorganization plans are
critical to the bankruptcy reorganization process. The fundamental EV or negotiated settlement
value determines the amounts, if any, of distributions to each class of creditors.
• Median Retail Third-party valuation advisors that produce enterprise value estimates typically use several
Reorganization Enterprise valuation methodologies, including discounted cash flow, peer comparable analysis and
Valuation Multiple of 5.4x
EBITDA. precedent transaction analysis to estimate the going concern valuations used to inform
claimholders prior to voting to accept or reject the plan of reorganization.
Fitch typically applies a 4.0x–6.0x enterprise reorganization multiple to forecasted post-

emergence EBITDA in its going concern recovery analyses for retailers with IDRs of ‘B+’ or
lower. The median reorganization enterprise value/forward EBITDA was 5.4x for the 11
retailers that reorganized as going concerns and had sufficient data available to estimate an
enterprise valuation multiple.
Reorganization Multiples for Going Concern Reorganizations

Company Enterprise Value/Forward EBITDA (x)
Harry & David Holdings, Inc. 4.2
Winn-Dixie Stores, Inc. 4.2
BI-LO, LLC 4.5
Brookstone 4.8
Great Atlantic and Pacific Tea Company, Inc. (The) 5.4
Fairway Group Holdings Corp. 6.1
BSCV, Inc. (formerly Boscov’s Inc.) 6.6
Penn Traffic Company (2003) 7.0
American Apparel 7.7
Quiksilver, Inc. 8.4
Loehmann’s Holdings Inc. (2010) 37.1
Median 5.4
Fitch calculated the ratios using the enterprise value estimates in the companies’ bankruptcy
plan disclosure statements that are used by claimholders as information used for voting on
reorganization plans. The ratios in the table above also used managements’ EBITDA forecasts
for the first full year following emergence.
Comparison of Prepetition and Post-Emergence EBITDA

Actual Prepetition Forecasted Post- Change
Company Name EBITDA ($ Mil.) Emergence EBITDA ($ Mil.) (%)
American Apparel, Inc. 38 29 (31)
BI-LO, LLC 78 88 11
Brookstone, Inc. 11 31 65
Fairway Group Holdings Corp. 42 24 (72)
Great Atlantic and Pacific Tea Company, Inc. (The) 104 185 44%
Harry & David Holdings, Inc. (17) 26 166
Loehmann’s Holdings Inc. (2010) (22) 3 916
Penn Traffic Company (2003) 54 28 (93)
Quiksilver, Inc. (12) 65 118
Winn-Dixie Stores, Inc. 140 181 23
Source: Fitch Ratings, company disclosure statements and financial statements.

September 28, 2016
Leveraged Finance
Loehmann’s management expected a significant increase in EBITDA in the second year
following emergence to $16 million from $3 million in year one, which would materially reduce
the EV/EBITDA exit multiple. The improvement did not occur, and the retailer ultimately
liquidated.
Liquidation Case Studies

When no viable offer is extended by going concern buyers and emerging as an independent
company via reorganization becomes impossible, then retailers turn to liquidation agents to
conduct full-chain GOB sales. These specialized companies conduct GOB sales on behalf of
the company based on the terms of negotiated agency agreements that must be approved by
the court. The liquidator strategically analyzes the pool of assets to estimate a net orderly
liquidation value, often provides a stalking-horse bid for the assets that is used in a bankruptcy
auction process, provides auction services and determines the optimal exit strategies for each
asset category, including merchandise, furniture, fixtures and other assets. The stalking horse
bid is accepted if no higher, better offer is received.
Fitch’s typical recovery analysis assumption that 70% of merchandise book value is realizable
in liquidation sales is supported by the minimum payment guarantees included in liquidation
agency agreements for GOB liquidations.
Sample Liquidation Agency Agreement Proceeds Distribution

($ Mil.)
100 Assumed cost value of merchandise (book value of inventory).
Distribution of Liquidation Proceeds

80 Retailer paid minimum guaranteed liquidation proceeds of 80% of merchandise cost value
by agent.
4 Agent paid liquidation fee of 4% of cost value of merchandise.
x Agent reimbursed for actual liquidation costs and expenses.
84 + x Sharing threshold = Sale proceeds in excess of 84% plus x are shared 50/50 between
retailer and agent.
Source: Fitch Ratings.
Typically, liquidation agents agree to pay the company in bankruptcy a specified minimum
guaranteed percentage of the merchandise cost, with sharing mechanisms for proceeds above
certain thresholds. Merchandise includes store inventory and distribution center inventory. The
sharing thresholds are any proceeds in excess of the sum of the minimum guarantee
percentage of merchandise cost, plus the agent’s fees and the agent’s expenses. Payment of
all expenses associated with GOB sales is the responsibility of the agent and includes costs
such as employee payroll, insurance, transportation, utility, advertising, and all other regular
store operating costs. (See table above for a hypothetical numerical example of how a typical
agency agreement works in practice). The Liquidation Agency Agreements table below
summarizes guaranteed percentages of cost and other key payment terms in specific retailer
bankruptcy cases. Additional information on the individual agency agreements follows.
Fitch commonly assumes that retail liquidations of inventory result in proceeds equal to 70% of
inventory book value in its issuer-specific recovery analyses for issuers rated ‘B+’ and lower.
The minimum guaranteed proceeds in the small sample of actual liquidation agency
agreements support the reasonableness of Fitch’s 70% assumption. The actual recovery will
depend on a number of factors, including merchandise category, aging of inventory (for
example, in-season holiday merchandise in October or November will get higher recoveries

September 28, 2016
Leveraged Finance
than in off-season clearance sales in January), and general retail environment and industry
inventory levels at time of liquidation.
Liquidation Agency Agreements

Guaranteed Minimum Percentage of
Company Merchandise Cost (at Book Value) (%)
Bombay Company (The) 109.5
Gottschalks, Inc. 98.0
Coldwater Creek Inc. 97.0
Linens ‘n Things, Inc. 95.1
ALCO Stores, Inc. 91.0
Syms Corp., Filene’s Basement, LLC 90.0
Goody’s, LLC 77.7
Borders Group Inc. 72.0
Circuit City Stores, Inc. 70.5
Finlay Enterprises, Inc. 64.8
Loehmann’s Holdings Inc. (2013) 29.8% of retail value plus other considerations
RadioShack Corporationa 1.5% of gross sales proceeds with additional 0.5%
paid if completed by certain dates
Movie Gallery Inc. Not specified
Penn Traffic Company Not specified
Value City Holdings, Inc. Not specified
a
Fees calculated on gross sales proceeds, not merchandise cost.
Source: Debtor agency agreements, Fitch Ratings.
ALCO Stores, Inc.

The bankruptcy court approved bid procedures in connection with an auction based on a
stalking horse bid per a liquidation agency agreement dated Oct. 15, 2014. The liquidation
agents were a joint venture among Tiger Capital Group, LLC, SB Capital Group, LLC and
Great American Group WF, LLC. The agency agreement provided that the company was
guaranteed to receive an amount equal to 91% of the aggregate cost value of the inventory
and merchandise sold, subject to certain adjustments. The company was entitled to receive
additional amounts from the sale of the inventory and merchandise if the total sale proceeds
exceed specified thresholds.
The Bombay Company, Inc.

An effort to sell the company as a going concern commenced on Oct. 10, 2007, and Bombay
filed on Oct. 20, 2007. After it became apparent that no going concern bid could be
consummated as a result of the auction, Bombay accepted a liquidation bid from a joint venture
(JV) comprising Gordon Brothers Retail Partners, LLC and Hilco Merchant Resources, LLC.
The JV agreed to pay 109.5% of the actual cost value of the U.S. inventory. Intellectual
property was sold separately for $2 million.
Borders Group, Inc.

Borders liquidated in two phases. Upon filing for bankruptcy in February 2011, Borders
announced a plan to immediately close 200 underperforming stores out of its 642 total stores.
GOB sales at these stores were conducted by the phase one liquidation agent, consisting of a
JV of Hilco Merchant Resources LLC, SB Capital Group, LLC and Tiger Capital Group LLC.
The phase one agreement included a put option for Borders to request liquidation at 75
additional stores to the extent Borders was unable to secure better lease terms from landlords
at these stores.

September 28, 2016
Leveraged Finance
The JV agreed to pay Borders a guaranteed minimum amount of 73% of the cost value of all
merchandise located at the closing stores. Borders estimated the sales would bring at least
$131 million and as much as $148 million into the estate, plus a 50% share of any proceeds
received during the store closing sales after a fee equal to 5% of merchandise cost and
recovery of agent expenses. Completion of the GOB sales for the underperforming stores
closed in the first round occurred by June 2011.
Next, there was an unsuccessful effort to sell the remaining stores as a going concern through
an auction process. The stalking horse bidder for the auction, Direct Brands, a portfolio
company of Najafi Companies, proposed to purchase the assets of the remaining stores for
$215 million cash plus the assumption of $220 million of liabilities and payment of $15 million of
expenses. There were no other going concern bids received. The stalking horse bidder decided
not to proceed.
Borders also secured a back-up bid from a JV of liquidation firms for full-chain liquidation. The
JV consisted of Hilco Merchant Resources, LLC, Gordon Brothers Retail Partners, LLC, SB
Capital Group, LLC, Tiger Capital Group, LLC and Great American Group, LLC
One week after the failed auction, Borders moved forward with the phase two liquidation sale.
The guaranteed minimum percentage to be paid by the JV was 72% of the cost value of the
merchandise (using an estimate of $350 million–$395 million subject to adjustments), plus a
50/50 sharing of proceeds above a threshold level consisting of the 72% minimum plus the
agent fee and costs of the sale. The JV was responsible for all costs of the sale and was also
entitled to a fee of 4% of the proceeds of certain merchandise sales.
Circuit City Stores, Inc.

Circuit City pursued various restructuring alternatives prior to its bankruptcy, including closure
of 155 unprofitable stores in 2008. Efforts continued after the November 2008 filing of a
bankruptcy petition, including a stand-alone plan, a sale of the business and transactions with
strategic partners. The company determined that a sale of the business, as a going concern or
as a liquidation, was the best alternative for maximizing the value for creditors. In January 2009,
the company held an auction for the sale of all assets. No viable going concern bids were
received, and it was then determined that a bid from a liquidator JV was the best alternative.
On Jan. 15, 2009, the company entered an agency agreement with a JV that included Great
American Group WF, LLC, Hudson Capital Partners LLC, SB Capital Group, LLC and Tiger
Capital Group, LLC. The agreement to conduct the sale of all merchandise at 567 stores was
approved by the bankruptcy judge the following day.
The liquidation agent agreement guaranteed that the proceeds of the sale would equal 70.5%
of the aggregate cost value of the merchandise plus an amount sufficient to pay expenses.
There was a 70% Circuit City/30% agent sharing mechanism for proceeds above a sharing
threshold. The sharing threshold was sale proceeds in excess of the 70.5% minimum plus the
agent’s expenses plus a 1% agent’s fee.
The sales started on Jan. 17, 2009 and were completed on March 8, 2009.
Finlay Enterprises, Inc.

Finlay’s liquidation took place in stages. Several months prior to the August 2009 bankruptcy
date, the jewelry retailer closed its department store locations and certain stand-alone stores.
The clearance sales were done with the assistance of a liquidator, Gordon Brothers Retail
Group.

September 28, 2016
Leveraged Finance
On Aug. 5, 2009, the company and Gordon Brothers entered an agency agreement for the
GOB sales at the 49 stand-alone specialty stores that had not yet been liquidated and two
distribution centers. The sale was scheduled to start in September 2009 and be completed no
later than Jan. 31, 2010.
Gordon Brothers guaranteed proceeds of 64.75% of the cost value of the merchandise with a
50/50 sharing of proceeds above a threshold. The guaranty percentage was based on the cost
value of merchandise in the 49 stores in the range of $120 million–$123 million. The sharing
threshold was based on the sum of the 64.75% minimum proceeds plus the agent’s fees and
expenses. Agent fees included a base fee of 4.25% of the cost value of the merchandise plus
2.125% of the cost of certain additional merchandise sold.
Goody’s, LLC
Goody’s LLC entered a liquidation agency agreement with a joint venture of Hilco Merchant
Resources LLC and Gordon Brothers Retail Partners LLC on Jan. 6, 2009. The liquidator
guaranteed to pay Goody’s an amount equal to 77.7% of the cost value of the merchandise
included in the sale, subject to certain adjustments. The guarantee percentage was fixed based
on the cost value of the merchandise not being less than $110 million or more than
$114 million. The liquidation sale was to start on Jan. 9, 2009 and be completed by
March 31, 2009 unless extended by mutual agreement.
The company decided to liquidate prior to the bankruptcy filing date.
Gottschalks, Inc.
Gottschalks’ liquidation agency agreement was approved on April 7, 2009, approximately three
months following the petition date. The liquidation agent selected to conduct the GOB sales for
59 stores was a JV comprising SB Capital Group, LLC, Tiger Capital Group, LLC, Great
American WF LLC and Hudson Capital Partners LLC.
The JV guaranteed proceeds of 98% of the cost value of the merchandise plus expenses to
Gottschalks. The agent received a fee of 4% of merchandise cost value, and there was a
sharing mechanism for proceeds above a certain threshold. The Finlay (jewelry) goods were
consignment goods and were excluded from the merchandise. Finlay was entitled to 100% of
the proceeds from liquidation of its goods, less a 5.2% sales proceeds fee retained by the
agent and agent expenses.
Linens ‘n Things, Inc.

Linens ‘n Things entered a liquidation agency agreement with a JV liquidation agent for GOB
sales at its stores five months after the bankruptcy petition date. The guaranteed minimum
percentage of merchandise cost to be paid to the company by the JV was 95.1%, subject to
certain adjustments and a 50/50 sharing mechanism for proceeds in excess of the guaranteed
minimum plus agent fees and costs.
Movie Gallery Inc.

The Movie Gallery store closing process began prior to the Feb. 2, 2010 bankruptcy filing date,
with the intent of closing unprofitable locations and restructuring as a smaller, more profitable
company. In the third and fourth quarters of 2009, 560 stores were closed with merchandise
liquidation sales of $180 million conducted by Great American Group.

September 28, 2016
Leveraged Finance
Immediately following the bankruptcy filing, the court approved some additional store closing
sales. Within two months, the company and its creditors abandoned the strategy of
reorganizing with a smaller store footprint and instead decided to proceed with shutting all
remaining stores.
Movie Gallery retained Great American Group to act as agent for the GOB sales in April 2010
and the court approved the motion for the sale of all remaining assets on May 20, 2010. Great
American guaranteed that Movie Gallery would receive $74.2 million from the sale of remaining
assets with a sharing mechanism for proceeds above a threshold. The consideration was
based on inventory units as of the sale commencement date, but no minimum guaranteed
percentage proceeds of merchandise cost value were specified. The liquidator charged a fee
equal to 3% of proceeds. The liquidation sales were completed by July 31, 2010.
RadioShack Corporation
General Wireless, a subsidiary of Standard General, acquired 1,743 of the better-performing
RadioShack stores in April 2015 to form the go-forward smaller footprint of the chain.
Inventory in the remaining stores was liquidated. The court motion to assume a liquidation
consulting agreement that was signed prior to bankruptcy filing was filed on Feb. 4, 2015. The
liquidation consultant engaged to conduct the GOB store closing sales of all merchandise and
furniture, fixtures and equipment (FF&E) were a joint venture comprising Hilco Merchant
Resources, LLC, Gordon Brothers Retail Partners, LLC and Tiger Capital Group, LLC.
The consultants received a flat fee of $500 for each store closed plus a percentage fee of 1.5%
of the gross sales at each closing location. In addition, to the extent that the GOB sales were
completed at 90% of the stores in number by certain target dates (for three separate groups of
stores) the consultant was entitled to receive an additional 0.5% of gross sale proceeds. In
addition, the consultants were entitled to 17.5% of the gross proceeds from sales of FF&E.
The GOB sales were to be conducted in three stages. The first group was closed by
Feb. 17, 2015, the second group of closings was completed by Feb. 28, 2015 and a third
tranche closed by March 31, 2015. The agreement stipulated that the consultants would accept
gift cards issued prior to the start of the GOB sales through March 31, 2015 and accept returns
(but not returns made to repurchase the same goods at the GOB price).
Syms Corp./Filene’s Basement, LLC

Syms spent five months trying to turn around its business or sell itself prior to filing bankruptcy
on Nov. 2, 2011. These efforts were unsuccessful. Syms reorganized and emerged from
bankruptcy as an owner of real estate assets, but did not operate as a retailer after emergence.
By the date of filing, the fate of the retail operation was sealed and the store merchandise
liquidation process was initiated. The GOB sales started two weeks after the bankruptcy filing
date under the terms of a liquidation agency agreement that was signed on Nov. 2, 2011.
The liquidation agent for the remaining 39 Syms/Filene’s stores was a JV between Gordon
Brothers Group, LLC and Hilco Merchant Resources, LLC. The JV agreed to pay a minimum
guaranty percentage of 90% of the aggregate cost value of the merchandise, with sharing
mechanisms for proceeds above a threshold.

September 28, 2016
Leveraged Finance
Value City Holdings, Inc.
Value City retained Tiger Capital Group, Inc. to perform GOB sales in a large percentage of its
stores under the terms of a consulting agreement that was signed prior to the Oct. 26, 2008
petition date. Tiger was also responsible for estimating the liquidation value of merchandise.
Following the petition date, Value City assumed the prepetition consulting agreement contract
with Tiger, which then assisted in the liquidation of remaining stores. Tiger’s duties included
assembling a management team for the GOB sales, managing merchandising and inventory,
preparing the stores for the sales, human resources and continuity plans.
Tiger received a base fee of $22,500 per store plus a success fee for exceeding certain gross
returns per store that was capped at $22,500. Payment of the success fee was to be made
only after all claims under the prepetition credit agreement were paid in full.
The liquidation of all stores was completed by Dec. 27, 2008.
Retail Recovery Rates
First-Lien Lenders Recover Well

First-lien lenders enjoyed full recoveries on at least one first-lien bank loan or secured bond
issue claim in 29 of 30 Fitch retail case studies. Regional NYC supermarket chain Fairway
Group Holdings Corp. (Fairway) was the outlier, with an estimated 45% recovery on a first-lien
term loan. Fairway’s debt consisted entirely of first-lien secured revolver and term loan
borrowings and prepetition leverage through the first lien was 6.6x, which exceeded the
enterprise valuation multiple. That distribution was made in a combination of 90% of the new
common stock, a last-out exit term loan and a subordinated holding company loan (contrasting
with cash distributions for most first lien holders). DIP borrowings were converted to a first-out
exit term loan and lenders received 10% of the new common stock in the Fairway case.
Second-Lien Recoveries Vary by Retailer

Second-lien debt recoveries were more variable for the very limited number of issue
observations at that seniority. In the Eddie Bauer case, first-lien lenders that were last out in
priority of payment (FILO) recovered 90% on their claim while the first-out, first-lien (FIFO)
lender claims were unimpaired. In the recently resolved RadioShack Corp. liquidation, second
lien lenders recovered less than 40%.
Unsecured Debt Recovers Poorly

Retailers’ unsecured debt issue claims realized mostly poor recoveries with a median
unsecured recovery rate of less than 10% and average recovery of approximately 25%. Four
retailers had unsecured claims that pushed up the unsecured recovery average as summarized
below.
• Quiksilver had an unsecured euro note guarantee claim that was paid at 100%. The
issuer was a nondebtor foreign issuer, and these notes were reinstated.
• The buyer of the Wet Seal chain assumed certain unsecured claims, and those
claimants (including assumed trade payables, employee benefits and assumed store
leases) were paid in full.
• Winn-Dixie Stores unsecured holders received distributions equal to 96% of their
allowed claim and Syms/Filene’s holders received 100% payment on allowed claims
at the Syms entity and 75% at the Filene’s entity.

September 28, 2016
Leveraged Finance
Recovery Rates by Claim Seniority

(% of Par Value)
Issuer Type First Lien Second Lien Unsecured
ALCO Stores, Inc. Retail 100 N.A. 8
American Apparel, Inc.a Retail 100/37 N.A. <1
Bombay Company, Inc. (The) Retail 100 N.A. 18
Borders Group Inc. Retail 100 N.A. 7
b
Brookstone, Inc. Retail 100/100 34 20
BSCV, Inc. (formerly Boscov’s Inc.) Retail 100 100 12
Circuit City Stores, Inc. Retail 100 N.A. 7
Coldwater Creek Inc. Retail 100/100 N.A. 11
c
Eddie Bauer Holdings, Inc. Retail 100/90 N.A. 0/9
d
Finlay Enterprises, Inc. Retail 100 100 5
Goody’s, LLC Retail 100 N.A. 1
Gottschalks, Inc. Retail 100 N.A. 9
Harry & David Holdings, Inc. Retail 100 N.A. 10
Hub Holdings Corp. (formerly Anchor Blue)e Retail 100/90 N.A. 3
.f
Linens ‘n Things, Inc Retail 100 27 N.A.
g
Loehmann’s Holdings Inc. (2010) Retail 100 37/14 8
Loehmann’s Holdings Inc. (2013) Retail 100 43 1
Movie Gallery Inc.h Retail 100/40 <5 <5
Orchard Supply Hardware Stores Corporationi Retail 100 80 2
Quiksilver, Inc.j Retail 100/17 N.A. 100/5
RadioShack Corp. Retail 100 39.7 <1
Syms Corp., Filene’s Basement, LLCk Retail 100 N.A. 100/75
Value City Holdings, Inc. Retail 100 N.A. <10
Wet Seal, Inc. (The)l Retail 100 N.A. 95/0
m
BI-LO, LLC Supermarkets 100 95 51
Fairway Group Holdings Corp.n Supermarkets 45 N.A. 100
Great Atlantic and Pacific Tea Company, Inc., (The) Supermarkets 100 100 3
Penn Traffic Company (2003) Supermarkets 100 N.A. 41
Penn Traffic Company (2009) Supermarkets 100 N.A. 12
Winn-Dixie Stores, Inc.o Supermarkets 100 N.A. 96
a
American Apparel asset-based loan (ABL) claims received 100% recovery, secured notes claims received 37.5%.
b
Brookstone ABL and term loan received 100%. cEddie Bauer ABL and term loan recovery rates were 100% and
85%–95%, respectively, convertible notes received 0% recovery and general unsecured claims received 2%–17%.
d
Finlay also had third-lien notes that recovered 45% of par. eHub Holdings ABL revolver claims obtained 100% recovery,
and Abelco secured facility recovered approximately 90%. fLinens ‘n Things floating rate notes were secured by a first
g
lien on fixed assets and certain other collateral and second lien on working capital assets. Loehman’s Class A and
Class B notes were secured by certain lease assets. hMovie Gallery revolver was first in right of payment and recovered
100%, the first-lien term loan was second in right of payment and recovered 36%–43%. iOrchard Supply Hardware
second-lien issues had first lien on PP&E and second lien on ABL loan working capital assets. jQuiksilver ABL claims
received 100% recovery and first-lien note claims got 17% recovery. Unsecured notes issued by non-debtor subsidiary
recovered 100% (reinstated), 10% unsecured note claims received 4.5% distribution. kAll unsecured claims against
Syms recovered 100%, short-term claims against Filene’s recovered 100% and long term Filene’s claims recovered
l
75%. Wet Seal senior subordinate notes received 0% recovery as they consensually subordinated their claims to those
of the general unsecured trade claims (91%–101%). mBI-LO term loan had first lien on fixed assets and second lien on
working capital assets. nFairway Group Holdings non-priority trade claims paid out at 100% by settlement. oWinn-Dixie’s
unsecured recoveries refers to notes recovery. As per compromise settlement, other types of unsecured claims had
various percentage recoveries. N.A. – Not applicable.
Note: If there was no unsecured debt issue, Fitch includes general unsecured claim recoveries in unsecured column. If
recoveries were within a specified range, this table presents recovery as midpoint range value.

September 28, 2016
Leveraged Finance
Other Findings
In many cases, the first-lien lenders were repaid in full in the form of cash shortly after the
bankruptcy petition date (based on disclosure statement estimates of reorganization date
allowed claim amounts that often showed no claim at this level as debt was fully paid). Secured
prepetition ABL loans were often paid in full with proceeds of debtor-in-possession (DIP)
borrowings soon after the petition date (in a refinancing known as a DIP roll up) or via
repayments made during bankruptcy using proceeds from GOB sales.
The average duration from petition date to plan confirmation date of the 30 retail cases was
11 months, with a range of one month to 26 months.
Most distributions in retail sector bankruptcies cases were paid in the form of cash. This
reflects the above-average liquidation outcome rate for which there is no new common stock or
debt issued. For retailers that continued to operate as going concerns, prepetition loans were
sometimes converted into DIPs (or paid in cash by a new DIP) or via reinstatement of a debt or
trade claim at emergence or through debt-to-equity conversions.
For example, in the Harry & David case, a subset of prepetition noteholders provided
$55 million of new equity capital, and the old noteholders also received a share of the new
equity in a debt-to-equity conversion.

September 28, 2016
Leveraged Finance
Retailers in Chapter 11
There are five sizable retail chains currently in bankruptcy. These cases can be analyzed in
upcoming retail sector bankruptcy case study editions when cases have been resolved.
Valuations, distributions by class and type of outcome are finalized once a plan of
reorganization or liquidation becomes effective. Golfsmith International Holdings, Inc. filed on
Sept. 14, 2016 with approximately $500 million in debt. A summary of developments to date for
the other four cases is provided in the table below.
Retailers in Chapter 11
Bankruptcy
Company Retail Type Filing Date Notes
A&P Grocery 7/19/15 A&P filed again just a few years after emerging from a prior
bankruptcy. The company has already sold most of its grocery
stores in a piecemeal liquidation and will not operate post-
bankruptcy. More than $900 million of liquidation proceeds had
been raised by July 1, 2016. The sales of 17 liquor stores have
not been completed, and most of the liquidation proceeds have
not yet been distributed to claimholders.
Aeropostale, Inc. Teen Apparel 5/4/16 The proposed plan of reorganization provides for a sale of
substantially all assets. The company had identified
approximately 400 stores for shut-down and on Sept. 16, 2016
closed the sale of its remaining 400 stores and other assets for
$273 million as a going concern to a consortium led by General
Growth Properties Inc. and Simon Property Group. On
Sept. 21, 2016, the new owners of the ailing teen retailer
announced that they will work on keeping up to 475 stores
open in the U.S. — an additional 75 stores — as more
landlords agree to reduce rents.
Pacific Sunwear of Sports and Fashion 4/7/16 Proposed plan of reorganization is based on a restructuring
California, Inc. Influenced by support agreement with the term loan lenders and would lead
California Lifestyle to the company’s emergence as an independent going
concern. The proposed plan would provide the term loan
holders with 100% of the new common equity and a new term
loan in exchange for a new money $20 million investment to
fund operations in the form of debt and/or equity. However,
there are some objections to the plan and the company asked
the bankruptcy court to extend the exclusive period during
which the company can file another plan to Nov. 3, 2016.
Sports Authority, Sporting Goods 3/2/16 A full-chain going-out-of-business (GOB) sale is underway. The
Inc. (The) and Apparel seller of branded sportswear’s product line lacked compelling
differentiation. In addition, conflicts between vendors that
supplied inventory on consignment and the company and its
lenders on who owned the inventory was one issue that arose
during the case and made it more difficult to pursue a
reorganization. The company originally envisioned closing
unprofitable locations and emerging as a smaller chain.
However, a substantial portion of total sales was based on
consignment sales, and this complicated issues relating to
GOB sale pricing.
Source: Company reports, Fitch Ratings.

September 28, 2016
Leveraged Finance
Retailers at Risk of Default
Fitch identifies the retailers with the highest risk of defaulting within one year in the table below.
The table includes two default watch lists: the first displays retailers with a high yield bond
issue of concern and the second those with an institutional term loan of concern. These lists
maintained for the Loan and Bond Default Index and monthly default insight reports (see
Related Research on page 1). Fitch monitors issue trading prices, issuers with low ratings and
news stories to compile and maintain the Loans and Bonds of Concern lists.
Most of the retailers at high risk of default are challenged by declining mall traffic, competition
from online and other types of retailers, and/or a lack of a compelling product line. Highly
leveraged capital structures may become unsustainable in the face of these challenges.
Retail Bonds and Loans of Concern

(As of Aug. 31, 2016)
Issuer Amount Outstanding ($ Mil.)
High-Yield Bonds of Concern
Claire’s Stores, Inc.a 2,190.2
Sears Holdings Corporation 1,139.6
Nine West Holdings, Inc. 705.2
99 Cents Only Stores LLC 250.0
Rue21, Inc. 250.0
Nebraska Book Company, Inc. 110.0
Institutional Term Loans of Concern

Sears Holdings Corporation 1,718.0
Nine West Holdings, Inc. 775.0
99 Cents Only Stores LLC 598.5
Rue21, Inc. 530.0
True Religion Apparel, Inc. 485.0
a
Completed a debt exchange on certain notes. Note: Names above reflect our view of the most concerning issuers in the
high-yield and leveraged loan markets.
Source: Fitch Ratings, Bloomberg, Thomson Reuters LPC.
Sector Default Rate

Since 2014, the retail sector default rate has been lower than the overall U.S. high yield market
default rate. The 2015 and TTM August 2016 cross-sector default rates have been propelled by
widespread distress in the oil and gas exploration and production and mining sectors.
Retail and U.S. High Yield Market Default Rates
(Par Weighted Default Rate) Retail Sector High Yield Market
6
5
4
3
2
1
0
2010 2011 2012 2013 2014 2015 TTM Aug. 2016
Source: Fitch U.S. High Yield Default Index, Advantage Data.

September 28, 2016
Leveraged Finance
Appendix
Concession Payments (Settlement Distributions)

Rough
Payment
EV or LV as % of
Company Resolution Payor Recipient ($ Mil.) Total EV Notes
BI-LO, LLC Emerged/ Secured General Unsecured 400 12.5 Term lenders received 94% of their $275 million claims,
Reorganized and Convenience General unsecured and Bruno’s claims totaling roughly
Private Claims $85 million received recoveries in the range of 44% to
58%, Convenience claims received 60% of $1.2 million–
$3.5 million claim amount. Unsecured claims recovered
in range of 43.7%–57.8% ($40 million–$44 million) and
term loan lenders got 94.5% (first on PPE, second on
WC assets).
Brookstone, Inc. Sale of Assets as Second Lien General Unsecured 147 0.7 Second-lien lenders recovered 34% of their $137 million
Going Concern claims, general unsecured recovered 11%–30.5% of
their $9 million–$11 million claims ($1 million
concession).
Coldwater Creek Inc. Liquidation Secured Term Guaranteed 264 1.7 The substantive consolidation settlement provides for a
Loan and Certain Unsecured 65% increase in the amount of guaranteed claims and a
Unsecured 20% increase in Coldwater/Aspenwood unsecured
claims. Secured term-loan lenders reduced the face
amount of their claims by $4.4 million under the global
settlement.
Eddie Bauer Sale of Assets as Term Lender General Unsecured 286 5.9 The secured term-loan lenders were projected to
Holdings, Inc. Going Concern Secured Loan recover 85% to 95% of their $203 million claim amount.
General unsecured lenders were projected to recover
2%–17% of claims, which were projected to range from
$105 million to $144 million.
Fairway Group Emerged/ Secured Revolver Trade Claims 150 4.0 The $5 million–$7 million of trade and vendor claims
Holdings Reorganized and Term Loan were paid in full. The $279 million of secured revolver
Private Facility and term loan claims recovered 45%.
Finlay Enterprises, Liquidation Third-Lien Notes General Unsecured 162 3.0 The $194 million of third-lien claims recovered 44.7%
Inc. and Third-Lien and the $144 million of general unsecured claims
Vendor Claims recovered 4.9% ($7 million cash distribution) as a result
of a settlement.
Goody’s LLC Liquidation General Unsecured General Unsecured 122 — $1 million of WARN Act union claims were reclassified
WARN Act Union as priority claims as a result of a settlement.
Settlement Claims
Great Atlantic Emerged/ Unsecured Notes, Guaranteed Landlord 1,000 0.7 Unsecured notes, bonds and general unsecured claims
and Pacific Tea Reorganized Bonds and General Claims and Pension recovered in the range of 2.1%–2.5%. Guaranteed
Company, Inc. (The) Private Unsecured Claims Plan Withdrawal landlord claims had a recovery range of 3.0%–3.9% and
Claims pension withdrawal claims had a recovery in the range
of 4.9%–6.3% as a result of the substantive
consolidation settlement.
Hub Holdings Corp. Sale of Assets as Secured Term General Unsecured 89 9.7 $8.65 million of the $79 million term-loan claim was
Going Concern/ Loan classified as a general unsecured claim pursuant to a
Liquidation compromise and settlement agreement that was
approved by the court on June 30, 2009. The
$79 million loan recovered 90% and the $34.5 million
general unsecured claims recovered 2%–4%.
Loehmann’s Holdings Liquidation Third Lien General Unsecured 22 2.3 Settled per case wind-down agreement.
Inc. (2013)
Linens ‘n Things, Inc. Liquidation Senior Secured Trade Claims 592 — The $669 million of senior secured floating-rate notes
Notes recovered in the range of 25%–30%. These notes were
secured by a first lien on PP&E and second lien on
working capital assets. The general unsecured claim
recovery range was not provided. However, the
claimholders were entitled to vote, which means
recovery exceeded $0.
Movie Gallery Inc. Liquidation First-Lien Term General Unsecured 150 3.3 First-lien term loan claims of $408 million recovered in
Loan Claims, Including the range of 8.7%–10.5%. General unsecured claims,
Second-Lien including second-lien deficiency claims received
Deficiency Claims distributions from a $5 million unsecured creditor
liquidating trust.
Orchard Supply Sale of All Assets Secured Term Trade Related 225 N.A. All trade claims with suppliers were assumed by the
Hardware Stores as Going Concern Loans B1 and B2 General Unsecured acquiror, Lowes Corp. and paid in full.
Corp.
Quiksilver, Inc. Emerged/ First-Lien Notes Unsecured Notes and 546 1.8 The $282 million of first-lien notes recovered 17%. U.S.
Reorganized General Unsecured unsecured note claims and general unsecured claims
Private totaling $279 million shared a $10 million cash
distribution and were eligible to participate in a rights
offering.
EV – Enterprise value. LV – Liquidation value. N.A. – Not available. Continued on next page.
Source: Company disclosure statements, Fitch Ratings estimates.

September 28, 2016
Leveraged Finance
Concession Payments (Settlement Distributions) (Continued)

Rough
Payment
EV or LV as % of
Company Resolution Payor Recipient ($ Mil.) Total EV Notes
RadioShack Corp. Liquidation Second Lien Various Unsecured 393 3.1 Unsecured claims in the range of $530 million–
Claim Classes $730 million, including 6.75% notes, trade and other
general unsecured claims, recovered less than 2%.
Syms Corp. Emerged/ Long-Term Union Pension Plan 172 2.2 The $6 million of pension plan withdrawal claims and
Reorganized Unsecured Claims
Withdrawal Claims, the $9 million of short-term unsecured claims were paid
Public against Filene’s
Short Term in full, compared with 75% recovery rate on the
Debtor Unsecured Claims $37 million of long-term unsecured claims against
Against Filene’s Filene’s debtor.
Debtor
Wet Seal Inc. (The) Sale of All Assets Unsecured Senior General Unsecured 35 5.7 An unsecured creditor, Rodam LLC, which purchased
as Going Concern Convertible Note Creditors Excluding $24.9 million of senior convertible notes issued to
Rodam LLC Claim Rodam LLC Hudson Bay Master Fund Ltd., agreed to subordinate its
Convertible Note $29 million general unsecured claims to subordinated
Class claim status and did not receive any distribution.
Winn-Dixie Stores, Emerged/ Various Various Unsecured 758 N.A. Distributions to unsecured holders were based on a
Inc. Reorganized Public Claim Classes compromise and settlement.
EV – Enterprise value. LV – Liquidation value. N.A. – Not available.
Source: Company disclosure statements, Fitch Ratings estimates.
No Concession Payments (No Settlement Distributions)

Company Resolution
Alco Stores, Inc. Liquidation
American Apparel, Inc. Emerged/Reorganized Private
Bombay Company, Inc. (The) Liquidation
Borders Group Inc. Liquidation
BSCV Inc. (Boscov’s, Inc.) Emerged/Reorganized Private
Circuit City Stores, Inc. Liquidation
Gottchalks, Inc. Liquidation
Harry & David Holdings, Inc. Emerged/Reorganized Private
Loehmann’s Holdings Inc. (2010) Emerged/Reorganized Private
Penn Traffic Company (2003) Emerged/Reorganized Public
Penn Traffic Company (2009) Liquidation
The Bombay Company Liquidation
Value City Holdings Inc. Liquidation

September 28, 2016
Leveraged Finance
ALCO Stores, Inc.

($ Mil., Except Where Noted)
Issuer Profile Key Drivers of Bankruptcy Filing

Fitch Industry Classification Retail Key Driver Flawed Business Model or Obsolete Product
Subsector Regional Broad Line Retailer Key Driver Untenable Capital Structure
Prepetition Ticker Symbol ALCS
Petition Date Assets 235 Financial Profile
Emergence Parent Company Not Applicable/Liquidated 12-Month Period Amount
a
Name/Ticker Prepetition EBITDA FYE 2/2/14 (7)
Post-Emergence EBITDA Forecast Not Applicable Liquidated
Bankruptcy Summary
Did All Entities in the Group File? Yes Enterprise Value (EV) Range (or Asset Value Range)
Plan Proposed by Debtor Low 150
Court District Texas — Northern High 160
Substantive Consolidation No Midpoint EV (Value) 155
Petition Date 10/12/14 Equity Value Range
Confirmation or Conversion Date 6/4/15 Low 0
Effective Date 7/22/15 High 0
Duration (Months) 8 Midpoint EV/Post-Emergence EBITDA Estimate Not Applicable
Filing — Type Chapter 11
Section 363 Asset Sale by Debtor Yes — Sale of Substantially All Assets
(as Liquidation) Petition Date Versus Emergence Date
Voluntary or Involuntary Filing Voluntary Petition Date Emergence Date
Postconfirmation Liquidating Trust Yes Total Debt 162 0
Resolution Liquidation (Under Chapter 11) Consolidated Leverage (x) (23.1) Not Applicable
Debt Shed in Bankruptcy — 162
Debt Shed in Bankruptcy (%) — 100
Events Leading Up to Bankruptcy (or Contributing Factors)

Weakness in store traffic and customer spending, particularly on discretionary items in its small-town markets led to the filing. This was caused by the economic
slowdown, increased rates of mortgage loan default and personal bankruptcy and declining business and consumer confidence. In addition, there were challenges from
the increasing competition in the discount retail sector. Gross margin dropped to 29.1% in the six months ended Aug. 3, 2014, from 31.1% in the same period of 2013.
The company became at risk for violating covenants under its credit facility as cash flow eroded and attempted to raise new capital or negotiate a debt restructuring, but
was unsuccessful. Liquidity was further tightened as a result of more restrictive trade supplier terms. There was a proxy battle to replace the seven incumbent board of
directors at the August 2014 shareholder meeting as well as class action lawsuits alleging breach of fiduciary duties. The entire board was replaced.
Valuation Estimate Summary

Creditor Recovery Amounts and Liquidation Sale Proceeds Establish Rough Liquidation Value
Immediately after the filling, a sale process motion was filed to have a full chain 198 store closing sale conducted with a liquidator. A joint venture among Tiger Capital
Group, SB Capital Group and Great American WF served as the stalking horse liquidation agent for an auction. No higher, better bid was made during the bidding
process. The agents started the going-out-of-business (GOB) sales on Nov. 21, 2014 and expected to complete the process by March 8, 2015. These GOB sales
provided the bulk of recovery value, but no dollar total is available. Fitch uses the prepetition debt amounts and recovery rates to estimate an approximate company
value of $150 million–$160 million. In addition to the GOB sales, certain owned real estate properties were liquidated for approximately $13.3 million. These included: a
distribution center in Abilene, KS for $3 million, a store in Moab, UT for $1.4 million, a Tioga, ND property for $3.8 million, a Sidney, MT property for $1.6 million and
various other miscellaneous assets for another $3.5 million.
Liquidation Value Alternative

There was no Chapter 7 alternative liquidation analysis provided.
a
Source of prepetition EBITDA is 10-K for FYE Feb. 2, 2014. FYE – Fiscal year end.
Source, unless otherwise noted: Amended disclosure statement for the first amended plan of reorganization dated April 7, 2015.
Market Sector / U.S.A.

September 28, 2016
Leveraged Finance
ALCO Stores, Inc. (Continued)

Estimated Recoveries for Select Claims
Form of Distribution
Allowed Projected Equivalent Secured Unsecured Subordinated New Options/
Claim Seniority Claim Type Claims Recovery (%) RR Category Cash Notes Notes Notes Equity Warrants
DIP and Priority DIP Facility and Other 133 100.0 RR1 133 — — — — —
Administrative Priority
Secured $142.5 Million ABL Revolving 0 100.0 RR1 0 — — — — —
Credit Facility and Term Loan
Secured Capital Lease Obligations 16 100.0 RR1 16 — — — — —
Unsecured General Unsecured Trade Claims 49 1–15 RR6 0.5–7.6 — — — — —
Estimated Claims 198 — Recoveries 149 0 0 0 0 0
New Borrowings at Emergence 0 — — — — — — — —
Debt of Nonfiling Affiliates on
Emergence Date 0 — — — — — — — —
Claim Seniority Claim Type Description

DIP and Priority DIP Facility and Other • The DIP facility was approved by the court for borrowings of up to $122.675 million.
Administrative Priority • All DIP facility loans were paid in full on Jan. 22, 2015. The amount of other administrative and priority claims
was not provided and the total DIP, administrative and priority claim is a Fitch estimate.
• While there were no DIP claims on the plan effective date as the debt had already been paid, Fitch shows an
assumed $120 million of DIP borrowings and $13 million of other estimated claims paid with the use of the
liquidation proceeds raised in the GOB sales.
Secured $142.5 Million ABL Revolving • Petition date borrowings of $104 million were paid in full by the DIP facility.
Credit Facility and Term Loan • Holders were paid in full in cash or received the underlying collateral prior to the disclosure statement date and
therefore holders had no claims.
• Included a $125 million borrowing base revolver, a $12.5 million term loan and a $5 million real estate loan.
Secured Capital Lease Obligations • Paid in full in cash.
Unsecured General Unsecured Trade Claims • Recoveries paid in cash, including a pro rata portion of a liquidating trust.
RR – Recovery Rating. DIP – Debtor in possession. ABL – Asset-based loan.

Source, unless otherwise noted: Amended disclosure statement for the first amended plan of reorganization dated April 7, 2015.

September 28, 2016
Leveraged Finance
ALCO Stores, Inc. (Continued)

Additional Information
Cash on Filing Date $2.9 million as of Oct. 12, 2014, including $2.7 million of unrestricted cash per the Dec. 1, 2014 monthly
operating report filed as an 8-K.
Prepetition Bank Facility Commitments $125 million ABL revolver and two term loans totaling $17.5 million.
Prepetition Bank Facility Borrowings on Filing Date $86 million borrowed under ABL revolver.
Was the DIP a New Money Facility or Roll Up of a The DIP was partially a new money facility ($10 million) and partially a roll up of the prepetition ABL
Prepetition Facility? borrowings. The facility consisted of a $110 million revolver and $12.675 million term loan.
Other Notable Issues None
Executory Contracts Operating lease obligations with monthly lease payments totaling more than $2 million.
Deficiency Claims No, secured claims were paid in full.
Contingent Claims and/or Contingent Recoveries There was a liquidating trust established for unsecured creditors as well as a disputed claim reserve that was
to be managed by the liquidating trustee.
Intercompany Claims None
Pension Claims/Motions None
Postpetition Interest? Yes
If Yes, Recipient Class Secured
Concession Payments No
Recipient and Comments Not applicable.
ABL – Asset-based loan. DIP – Debtor in possession.
Source: Fitch Ratings and company disclosure statement, dated April 7, 2015.

September 28, 2016
Leveraged Finance
American Apparel, Inc.


Subsector Designs, Manufactures, Distributes and Retails Key Driver Fraud
Branded Fashion Basic Apparel Products
Prepetition Ticker Symbol APP Financial Profile
Petition Date Assets 294 12-Month Period Amount
b
Emergence Parent Company American Apparel/Not Publicly Traded Prepetition EBITDA 12/31/14 38
Name/Ticker Post-Emergence EBITDA Forecast 12/31/17 29
Bankruptcy Summary Enterprise Value (EV) Range (or Asset Value Range)
a
Did All Entities in the Group File? No Low 180
Plan Proposed by Debtor High 270
Court District Delaware Midpoint EV (Value) 225
Substantive Consolidation No Equity Value Range
Petition Date 10/5/15 Low 75
Confirmation or Conversion Date 1/27/16 High 165
Effective Date 2/5/16 Midpoint EV/Post-Emergence EBITDA Estimate 7.7
Duration (Months) 4
Filing — Type Chapter 11 (Prearranged/Negotiated)
Section 363 Asset Sale by Debtor No Petition Date Versus Emergence Date
Postconfirmation Liquidating Total Debt 295 135
Trust Yes Consolidated Leverage (x) 7.7 4.6
Resolution Emerged/Reorganized (Private) Debt Shed in Bankruptcy — 160

American Apparel’s liquidity was adversely affected by a number of events and issues including: declining sales, rising costs, a difficult transition into a new distribution
facility in 2013, accounting investigations and allegations of fraud. These challenges pressured cash flow, strained liquidity and made the high leverage unsustainable. A
raid by federal immigration officials in 2009 impeded plans to raise debt for new store openings and product launches, and 1,800 workers were dismissed because of
documentation discrepancies. Profits were reduced by higher manufacturing and operating costs in 2010. Investigations by the SEC and FBI on accounting issues were
started in 2011 and several loan facilities were out of covenant compliance. The CEO was investigated for potential misappropriation of funds and was ousted in 2014.
He later sued the company. Sales continued to decline and liquidity further eroded. In August 2015, the company warned investors that it would not have enough cash to
sustain operations for the next 12 months.
A restructuring support agreement with several creditor parties was signed in October 2015, and the plan contemplated a new equity investment of at least $10 million
and potentially up to $40 million as well as a new exit term loan that provided $30 million of incremental debt capital.

Going Concern Enterprise Valuation
The third-party valuation advisor estimated an enterprise value range of $180 million–$270 million and assumed exit debt of no more than $135 million. The advisor used
several methods to estimate the value, including a publicly traded peer analysis based on projected and historical consensus EBITDA multiples, a discounted cash flow
analysis and a precedent transaction multiple analysis. The specific peer names and rate assumptions were not disclosed. The advisor relied on management’s forecast,
which included the following EBITDA projection:
($ Mil.) 2017 2018 2019 2020
EBITDA 29.1 58.0 59.7 69.5
While not related to the recent bankruptcy plan, Fitch notes that the company reportedly engaged Houlihan Loukey to explore a sale of the business in August 2016.

The hypothetical Chapter 7 alternative valuation of $129.9 million was based on discounts to asset book value. Resulting values and assumptions included:
• Cash of $4.8 million at 100%
• $11.6 million of receivables consisting of retail accounts receivable at 85%–95% and wholesale accounts receivable at 60%–75% of book value, respectively
• Inventory of $51.7 million was based on two most recent appraisals and assumed a net orderly liquidation value for retail inventory of 105%–110% and for wholesale
inventory a range of 60%–75% of book value
• $19.6 million of PP&E 10%–30%
• $40 million of brand value
a
Filing excludes foreign affiliates. bSource of prepetition EBITDA 10-K for fiscal year ended Dec. 31, 2014.
Source, unless otherwise noted: Modified disclosure statement dated Nov. 20, 2015.

September 28, 2016
Leveraged Finance
American Apparel, Inc. (Continued)

DIP and Priority DIP and Administrative 90 100.0 RR1 — 90 — — — —
Secured Asset-Based Loan Facility 60 100.0 RR1 60 — — — — —
Secured $229.6 Million 13% Secured Notes 230 37.5 RR4 — — — — 86 —
due 2020
Unsecured General Unsecured Claims at 145 <1 RR6 1 — — — — —
American Apparel, Inc.
Unsecured U.K. Guaranty Claim on 14% U.K. 15 100.0 RR1 — 15 — — — —
Loan due 2020
Unsecured Lion Credit Facility due 2021 10 <1 RR6 — — — — — —
Equity Equity Interests N.A. 0.0 RR6 — — — — — —

DIP and Priority DIP and Administrative • DIP facility related fees and expenses were paid in cash and the borrowings were converted into a new $60
million exit term loan facility.
• DIP interest rate was LIBOR plus 7%.
Secured Asset-Based Loan Facility • Paid in full in cash on the plan effective date to the extent not previously paid under the DIP order.
• Unimpaired
Secured $229.6 Million 13% Secured Notes • $86 million claim amount represents secured portion of notes and was the allowed claim amount; the
due 2020 remaining portion of the $229.6 million principal was classified as a general unsecured deficiency claim.
• Distributions in the form of 100% of the new common stock of the reorganized company, subject to dilution
for management incentive plan interest and the new equity investment interests.
• Recovery rate includes recoveries on deficiency claim of $143.8 million.
• 95% of noteholders signed onto the restructuring support agreement.
• Secured noteholders provided the $10 million of new equity capital and $30 million of new term-loan debt to
partially fund the plan of reorganization.
Unsecured General Unsecured Claims at • Distributions equal to a pro rata share of the litigation trust and, if the holder voted to support the plan, then
American Apparel, Inc. also received the applicable general unsecured creditor support payment.
• The support payment to be paid in seminannual installments for a year following the date of the plan effective
date.
• Claims of $145.1 million at American Apparel, Inc. as well as large claims at other entities, which may
overlap.
• Claim amounts include $143.8 million secured notes deficiency claim.
Unsecured U.K. Guaranty Claim on 14% U.K. • Loan to be reinstated pursuant to the restructuring support agreement.
Loan due 2020
Unsecured Lion Credit Facility due 2021 • This was an unsecured facility that carried an interest rate of 18% per year.
• The company missed an interest payment on these borrowings on Sept. 30, 2015 and was in default as of
Oct. 5, 2015.
Equity Equity Interests • Cancelled with $0 recovery.
RR – Recovery Rating. DIP – Debtor in possession. N.A. – Not available.
Source, unless otherwise noted: Modified disclosure statement dated Nov. 20, 2015.

September 28, 2016
Leveraged Finance
American Apparel, Inc. (Continued)

Cash on Filing Date $5.3 million per monthly operating report for October 2015 filed as 10-K.
Prepetition Bank Facility Commitments ABL revolver with maximum availability the lesser of $90 million or the borrowing base (petition date borrowing
base was not provided). As of June 2015, there was $6 million of remaining availability.
Prepetition Bank Facility Borrowings on Filing Date $60 million ABL borrowings.
Was the DIP a New Money Facility or Roll Up of a The $90 million DIP was used to refinance the $60 million of ABL borrowings and also provided $30 million in
Prepetition Facility? new money.
Other Notable Issues The company incurred substantial costs in connection with the termination of its prior chief executive officer.
On Oct. 30, 2015 the company sought court approval to close nine American Apparel stores and four OAK
stores and announced 12 more store closings at the end of December 2015. Approximately 200 stores
remained open.
Executory Contracts Leases were rejected on stores that closed. Insurance and compensation plans were generally continued.
Deficiency Claims Yes, secured noteholders had a deficiency claim.
Contingent Claims and/or Contingent Recoveries A litigation trust was formed to prosecute causes of action.
Intercompany Claims Compromised or reinstated at the company’s election.
Pension Claims/Motions None noted.
If Yes, Recipient Class ABL holders.
Recipient and Comments Not applicable.
Source: Fitch Ratings, disclosure statement dated Nov. 20, 2015.

September 28, 2016
Leveraged Finance
BI-LO, LLC

Fitch Industry Classification Supermarkets and Drug Stores Key Driver Deep Cyclical Trough
Subsector Supermarket Chain Key Driver Untenable Capital Structure
Prepetition Ticker Symbol Privately Held
Petition Date Assets 500
Emergence Parent Company Name/Ticker BI-LO Holding/Privately Held Financial Profile
12-Month Period Amount
Bankruptcy Summary Prepetition EBITDA
a
1/3/09 78
Post-Emergence EBITDA Forecasta 12/31/11 88
Did All Entities in the Group File? Yes
Plan Proposed by Debtor Enterprise Value (EV) Range (or Asset Value Range)
Court District District of South Carolina Low 400
Substantive Consolidation Yes High 400
Petition Date 3/23/09 Midpoint EV (Value) 400
Confirmation or Conversion Date 4/29/10 Equity Value Range
Effective Date 5/10/10 Low 163
Duration (Months) 13 High 163
Filing — Type Chapter 11 Midpoint EV/Post-Emergence EBITDA Estimate (x) 4.5
Section 363 Asset Sale by Debtor Yes — Partial Sale of Assets
Voluntary or Involuntary Filing Voluntary
Postconfirmation Liquidating Trust Yes Petition Date Versus Emergence Date
Resolution Emerged/Reorganized (Private)
Petition Date Emergence Date
b
Total Debt 325 237
Consolidated Leverage (x) 4.2 2.7

BI-LO operates in the supermarket industry that is generally characterized by intense competition and narrow profit margins. Financial performance deteriorated in the
years preceding bankruptcy with EBITDA declining to $76 million in 2008 from $114 million in 2006. The deterioration resulted from lower same-store sales and shrinking
margins as well as burdensome store lease obligations, including rental obligations on leases for store locations that were no longer in operation. BI-LO was faced with
the maturity of its $260 million term loan in March 2009 and was unable to refinance or replace this loan. After extensive discussions with its lenders the company
determined that in order to maintain business operations and customer service without interruption while addressing the near-term debt maturity, a court-supervised
restructuring was appropriate.

Fitch Estimate of Going-Concern Value Based on Sum Plan Payments to Claimants
There was no third-party going-concern enterprise valuation provided with the disclosure statement. Fitch estimates a rough going-concern enterprises value of
$400 million by summing estimated distributions to creditors. Creditor distributions included: $65 million prepetition revolver payments (refinanced with the DIP facility,
which, in turn, was paid in full). $260 million prepetition term loan distributions; and other payments to claims roughly estimated to total $135 million.
The best interests test was satisfied by comparing creditor recoveries under the plan to recoveries in a hypothetical Chapter 7 liquidation. Actual distributions may have
varied as the claim amounts were not finalized as of the disclosure statement date. The plan was partially funded by $150 million of new equity invested by an affiliate of
Lone Star Investments, a private equity firm that owned the company prior to the bankruptcy. The new equity was used to pay distributions to prepetition unsecured
creditors. In addition, cash was raised for the plan distributions from the proceeds of a new $200 million term loan and partial drawdown of a new $150 million ABL
facility (expected ABL borrowings to be in the range of $40 million–$50 million at emergence).

The liquidation alternative valuation was based on the $796.6 million book value of assets and would have resulted in gross proceeds of $265 million–$361 million.
Under this scenario, recoveries on the $260 million term loan were anticipated to be in the range of 31.6%–79.5% compared to 94.5% under the plan (principal plus
interest recoveries). The asset book values and percentages of asset book value applied in the analysis included:
• Cash and cash equivalents of $22.3 million at 100% of book value
• Cash recovery of letter of credit draw of $24.6 million at 100%
• Accounts receivable of $12.8 million at 91%
• Inventories of $181.5 million at 53%–101%
• Property and equipment of $388.3 million at 6%–12%
• Intangibles of $139.6 million at 0%–7%
• Proceeds from sale of 90 leases in a Chapter 7 liquidation were estimated at $41 million and includes proceeds from leases previously assumed during the
bankruptcy in this alternative scenario.
a
Represents “fully loaded” EBITDA forecast for both periods. bExcludes capital lease obligations which remained in place. DIP – Debtor in possession.
Source, unless otherwise noted: Disclosure statement for the debtor’s third amended plan of reorganization dated Feb. 12, 2010.
Note: This is an update of a case study published April 16, 2013.

September 28, 2016
Leveraged Finance
BI-LO, LLC (Continued)

($ Mil., Except Where Noted) Form of Distribution
DIP or Other
Administrative $125 Million DIP Facility 45 100.0 RR1 45 — — — —
Secured Secured Claims 1.9 100.0 RR1 2 — — — — —
Secured Term Lender Claims 275 94.5 RR1 260 — — — — —
General Unsecured Claims
Excluding Bruno’s and
Unsecured Pension Fund Claims 65–85 43.7–57.8 RR4 40–44 — — — — —
Bruno’s and Pension Fund
Unsecured Claims 0–100 43.7–57.8 RR4 0–57.8 — — — — —
Unsecured Convenience Claims 1.2–3.5 60.0 RR3 1–2 — — — — —
Not
Equity Old Equity Interests Applicable 0 RR6 — — — — — —
Estimated Claims 449.3 Recoveries 348–411 0 0 0 0 0
New Borrowings at
Emergencea) 237
Emergence Date 0

DIP or Other $125 Million DIP Facility • Paid in full in cash.
Administrative • All of the $65.7 million of prepetition borrowings and letters of credit under the old ABL facility were repaid soon after
the petition date with DIP facility drawings.
• $45 million was the remaining outstanding amount under the DIP as of the disclosure statement date and included
$25 million of letters of credit.
• The prepetition revolver was secured by a lien on all assets that was senior to the lien on the term loan with regards
to receivables and inventory.
Secured Secured Claims • Claims reinstated or receive other such treatment as agreed to by the company and creditor.
• Unimpaired, deemed to have accepted the plan.
Secured Term Lender Claims • Received full recovery of principal but did not recover accrued interest and fees.
• Received cash and also entitled to retain adequate protection payments made during the bankruptcy and proceeds
of certain equipment sales (together estimated at $18.7 million).
• Prepetition term loan liens were senior to the ABL revolver on equipment, investment property (including equity in
subsidiaries), intellectual property, real estate, and all other assets.
Unsecured General Unsecured Claims • Holders will receive their proportionate share of trust assets.
Excluding Bruno’s and • Received a cash contribution of $40 million or $44 million if the reorganized debtor’s assets are sold within 180 days
Pension Fund Claims of the effective date and the investor receives at least $175 million.
• The company estimated $75 million of claims, including $18 million of trade vendor claims, $41 million of executory
contract rejection claims, $12 million of Ahold guarantee claims, $2.3 million of tort litigation claims, and $2 million of
employee claims.
Unsecured Bruno’s and Pension Fund • Received the same percentage recovery on allowed claims as the general unsecured claims.
Claims • These are claims asserted by the bankruptcy estate of Bruno’s Supermarkets LLC and the United Food and
Commercial Workers (UFCW) Union and Employers Pension Fund.
• The Bruno’s UFCW Union claim could be determined to be between $0 and $66 million, and the Bruno’s Estate
Claim could be between $0 and $33 million. Negotiations were ongoing between all parties to resolve these specific
claims as of the disclosure statement date.
• Lone Start Fund V (U.S.) guaranteed the payments to these claims under the plan.
Unsecured Convenience Claims • Received 60% of the claim amount in a one-time payment from trust assets.
Equity Old Equity Interests • There will be no recoveries to old equity interests.
• Deemed to have rejected the plan.
• An affiliate of the private equity owner, Lone Star, provided $150 million of new equity to partially fund the plan; the
new equity interests are owned by Loan Star V BI-LO Investments, LLC.
a
New borrowings at emergence includes a $200 million new term loan and drawings under a $150 million new ABL. RR – Recovery Rating. DIP – Debtor in
possession. ABL – Asset-based loan.
Source, unless otherwise noted: Disclosure statement for the debtor’s third amended plan of reorganization dated Feb. 12, 2010.

September 28, 2016
Leveraged Finance
BI-LO, LLC (Continued)

Cash on Filing Date Not available. $48 million as of March 28. 2009, as per the company’s monthly operating report for the period
March 23–29, 2009.
Prepetition Bank Facility Commitments $100 million ABL facility due March 26, 2009 and $260 million term loan due March 26, 2009.
Prepetition Bank Facility Borrowings on Filing Date $65.7 million drawn under the $100 million ABL facility and $260 million term loan borrowings.
Was the DIP a New Money Facility or Roll Up of a Partial new money and partial roll up of the prepetition ABL loans.
Prepetition Facility?
Executory Contracts The company entered into amended supply agreements with its distributor C&S supply and obtained rent
concessions from stores that remained in business on the emergence date. As of the petition date, BI-LO had
250 leases (nearly all store leases and three headquarters related leases), some of which related to “dark
stores” that had been shut down, but BI-LO was still obligated to pay rent. BI-LO rejected leases on 29 store
locations in bankruptcy, and the estimated related lease rejection claims were $41 million. Some of the rejected
leases were guaranteed by Ahold, (BI-LO’s former owner), and to the extent Ahold had to perform under the
guarantee, it could assert a claim against BI-LO. The company and Ahold reached a settlement and
compromise on these lease guarantees, limiting claims to $7 million.
Deficiency Claims Not available.
Contingent Claims Disputed claims, including the Bruno’s/union pension claims (Class 5).
Intercompany Claims Reinstated
Pension Claims/Motions On Aug. 11, 2009, the United Food and Commercial Workers Unions and Employers Pension Fund (the
“Pension Fund”) filed claims against the debtors, alleging that the debtors are members of the “controlled group”
of organizations of Bruno’s and, accordingly, are allegedly jointly and severally liable for “withdrawal liability” in
the amount of $63.8 million (the “Pension Fund Claims”) that the Union Pension Fund asserts arise in
connection with Bruno’s liquidation sale in its bankruptcy case. The debtors dispute this assertion on the basis
that they are not a member of the Bruno’s controlled group (BI-LO spun off Bruno’s in March 2007).
Concession Payments Yes
Recipient Convenience claims, unsecured.
Source: Fitch Ratings, company disclosure statement dated Feb. 12, 2010.

September 28, 2016
Leveraged Finance
The Bombay Company, Inc.


Subsector Home furnishings Key Driver Deep Cyclical Trough
Prepetition Ticker Symbol BBAO
Emergence Parent Company Name/Ticker Not applicable Financial Profile
b
Prepetition EBITDA 2/3/07 (20)
Bankruptcy Summary Post-Emergence EBITDA Forecast Not Applicable Liquidated
a c
Did All Entities in the Group File? No Enterprise Value (EV) Range (or Asset Value Range)
Plan Proposed by Joint Plan of Debtor and Creditors Low 150
Court District Texas Northern High 159
Substantive Consolidation Certain Classes Midpoint EV (Value) 154
Duration (Months) 11 Midpoint EV/Post-Emergence EBITDA Estimate (x) Did Not Emerge
Section 363 Asset Sale by Debtor Yes — Sale of Substantially All
Assets (as Liquidation) Petition Date Versus Emergence Date
Postconfirmation Liquidating Trust Yes Petition Date Emergence Date
Resolution Liquidation (Under Chapter 11) Total Debtd 173 0
Consolidated Leverage (x) (8.6) Not Applicable

Bombay’s problems began in 2002, when the company set out to lower lease operating costs by transitioning to free-standing stores from mall-based stores as mall-
store leases expired. The freestanding stores were larger and stocked more furniture offerings that were not “carry out” merchandise. Customers reacted unfavorably to
this merchandise shift and store-relocation strategy. The freestanding stores required customers to visit Bombay on a destination shopping trip, rather than an impulse
visit when passing the store in a mall.
In another strategy change, Bombay increased the number of BombayKids stores, which had done well in the test marketing phase but did poorly on a full roll out of the
concept.
Competition in the home furnishings segment was increasing, requiring sales promotions to move some bigger ticket items such as furniture. The company tried to turn
around operations in 2006 through efforts to improve the inventory system, phase out BombayKids, and plans to shut underperforming stores. Bombay also hired an
investment bank to sell the company as a going-concern operation, but the sales efforts were unsuccessful.
Sales per square foot and financial results declined and liquidity became tight. Prepetition lenders refused to provide additional liquidity, which was necessary to pay the
costs of closing additional underperforming stores. The liquidity squeeze led to the decision to file Chapter 11 in September 2007.

Section 363 Asset Sale Proceeds Determined Value (to Liquidate Inventory)
Bombay sold its assets in a liquidation sale, and the company value was estimated by Fitch to be the sum of liquidation proceeds. An auction resulted in no going-
concern bids, and the company decided the best course of action was liquidation. A joint venture of Gordon Bros. Retail Partners and Hilco Merchant Resources (JV)
submitted the winning bid to be the agent to liquidate U.S. inventory and other assets. Bombay shuttered the U.S. stores while keeping its Canadian operations open
through a sale of Canadian stores for net proceeds of approximately $2 million. Through the agency agreement, the joint venture was authorized to sell the debtors'
inventory for a minimum consideration of 109.5% of inventory cost value. Such proceeds were used by Bombay to pay down prepetition secured obligations and
outstanding liabilities under the DIP credit facility. In addition to the inventory sale, the headquarters building was sold to Goff Capital for $16.5 million and intellectual
property was sold for $2 million. There was no disclosure of the total liquidation proceeds. The amounts repaid to DIP lenders, if any, prior to the disclosure statement
date were similarly not disclosed. Assuming liquidation proceeds were used to repay an estimated $48 million of DIP loans plus $72 million of prepetition revolver and
term loan debt plus estimated total reorganization expenses through the liquidation period of $15 million, and the general unsecured creditors received $13.9 million of
distributions from the liquidation (the low end of disclosure statement liquidation analysis range), then Fitch estimates an liquidation value of ~$159 million. Total
reorganization expenses from Sept. 20, 2007, to Aug. 30, 2008, were $13.9 million as per the monthly operating report for August 2008 filed as an 8-K.
Chapter 7 Liquidation Value Alternative

Trustee fees and other costs of a Chapter 7 would have reduced recoveries compared to Chapter 11 based on the Chapter 7 liquidation analysis.
a
Canadian subsidiaries filed separate petition in Canada. bSource is 10-K for fiscal year ended Feb. 3, 2007. cSource is Fitch estimate of approximate liquidation value
based debt recoveries. dSource is bankruptcy petition dated Sept. 20, 2007, October 2007 monthly operating statement and second amended disclosure statement
dated July 2, 2008. DIP – Debtor in possession.
Source, unless otherwise noted: Second amended disclosure statement dated July 2, 2008.

September 28, 2016
Leveraged Finance
The Bombay Company, Inc. (Continued)

$115 Million DIP
DIP Facility 0 100.0 RR1 48 — — — — —
$125 Million Revolving
Credit Facility Due
Secured 2011 0 100.0 RR1 62 — — — — —
$10 Million Term Loan
Secured Due 2011 0 100.0 RR1 10 — — — — —
Unsecured Trade Claims 75–84 16.0–29.0 RR5 13.9–21.8 — — — — —
Bombay Gift Card Not
Unsecured Convenience Claim Disclosed 25.0 — — — — — —
Subordinated Subordinated Claims 0 0 RR6 — — — — — —
Intercompany Intercompany Claims 0 0 RR6 — — — — — —
Equity Equity Claims 0 0 RR6 — — — — — —
Estimated Claims 75–84 Recoveries 136.0–141 0 0 0 0 0
New Borrowings at
Emergence 0 — — — — — — — —
Debt of Nonfiling
Affiliates on

DIP $115 Million DIP • The DIP was a senior secured, superpriority facility.
Facility • Letters of credit under the prepetition credit facility became letters of credit under the DIP facility and were cash collateralized.
• There were no outstanding claims remaining on the effective date. Borrowings were repaid with liquidation proceeds.
• The interim DIP order permitted initial borrowings of $48 million under the $115 million facility.
Secured $125 Million Revolving • Prepetition revolver debt was unimpaired and the lenders were repaid in full in cash with proceeds from liquidation sales.
Credit Facility Due • Collateral included a first priority lien on cash, accounts receivable and inventory.
2011 • Petition date borrowings of $61.8 million were fully repaid by the end of October 2007, with proceeds from the liquidation or
DIP borrowings. There were no remaining loans as of the disclosure statement date with the roll up and liquidation proceeds.
Secured $10 Million Term Loan • The prepetition term loan was unimpaired.
Due 2011 • Lenders had a first-priority lien on furniture, fixtures, leaseholds, and other unencumbered assets as well as a pledge of equity
second lien on accounts receivable, inventory, and other assets that were pledged on a first priority basis to the revolving
credit facility lenders.
• Petition date borrowings of $10 million were paid in full with proceeds from asset sales or DIP borrowings and recovery was
100%.
Unsecured Trade Claims • Trade and certain other unsecured claims were projected to receive between 16.4% and 28.9% of their allowed claims plus
their pro rata share of proceeds from litigation causes of action.
Unsecured Bombay Gift Card • Gift card holders received cash distributions for 25% of the face value of the gift card on the distribution date.
Convenience Claim
Subordinated Subordinated Claims • There were $0 distributions to subordinated claims and the class was deemed to reject the plan.
Intercompany Intercompany Claims • Canceled on substantive consolidation at emergence. Not entitled to vote and received $0 distributions.
Equity Equity Claims • No recovery
RR – Recovery Rating. DIP – Debtor in possession.
Source: Second amended disclosure statement dated July 2, 2008.

September 28, 2016
Leveraged Finance
The Bombay Company, Inc. (Continued)

a
Cash on Filing Date ($) $3.1 million.
Prepetition Bank Facility Commitments $125 million revolving credit facility with availability based on a borrowing base formula. As per the 10-Q for the
quarter ended May 7, 2007 (the last prepetition disclosure of revolver availability), there was $79 million
outstanding and $27 million available under the revolver ($106 million eligible borrowing base under $125 million
commitment).
Prepetition Bank Facility Borrowings on Filing Date $72 million, including $62 million revolving credit facility and $10 million term loan.
Was the DIP a New Money Facility or Roll Up of a Letters of credit were rolled into the DIP. The revolving facility loans were repaid using either DIP borrowings or
Prepetition Facility? liquidation proceeds.
Executory Contracts Amounts not disclosed.
Deficiency Claims No, secured debt was unimpaired.
Contingent Claims No
Intercompany Claims Intercompany claims were canceled with $0 distributions.
Pension Claims/Motions 401(k) plan only. To the extent not already terminated, any other retirement, disability, or healthcare plans
remaining on the effective date were to be terminated.
If Yes, Recipient Class Senior secured.
Recipient Not applicable.
a
Source is monthly operating statement 8-K for October 2007. DIP – Debtor in possession.
Source, unless otherwise noted: Fitch Ratings, second amended disclosure statement dated July 2, 2008.

September 28, 2016
Leveraged Finance
Borders Group Inc.


Fitch Industry Classification Retail Key Driver Deep Cyclical Trough
Subsector Operator of Book, Movie and Music Key Driver Flawed Business Model or Obsolete Product
Stores
Prepetition Ticker Symbol BGP
Petition Date Assets 1,425 Financial Profile
Emergence Parent Company Name/Ticker Not Applicable
Prepetition EBITDAª 1/29/11 (137)
Bankruptcy Summary Post-Emergence EBITDA Forecast Not Applicable Did Not Reorganize
Plan Proposed by Joint Plan of Debtor and Creditor Enterprise Value (EV) Range (or Asset Value Range)
Court District Southern District of New York Low 395
Substantive Consolidation Certain Classes High 445
Filing — Type Chapter 11 Midpoint EV/Post-Emergence EBITDA Estimate Not Applicable
Yes — Sale of Substantially All Assets
Section 363 Asset Sale by Debtor (as Liquidation)
Voluntary or Involuntary Filing
Postconfirmation Liquidating Trust
Voluntary
Yes
Petition Date Versus Emergence Date
Resolution Liquidation (Under Chapter 11) Petition Date Emergence Date
Total Debt 399 0
Consolidated Leverage (x) (2.9) Not Available

Key drivers of the Borders bankruptcy included the decline in consumer discretionary spending as a result of the weak economy, unfavorable leases, and competitive factors.
An important internal factor was the inability to respond rapidly to these changing conditions, including specifically, an inability outside of a bankruptcy process to timely
amend unprofitable real estate lease obligations. Competitive forces included the growth of online retailers. In addition, product formats evolved from purely physical formats
to include digital formats. This competition led to declines in same store sales and sales per square foot, which reduced profitability. This led to liquidity issues. Prior to the
petition date, approximately $178.8 million was past due to vendors, and approximately $18.6 million was past due to landlords. Borders was unable to negotiate a better
terms in negotiations with landlords and vendors. A new $550 million prepetition credit facility required Borders to obtain subordinate debt capital, and the company was
unable to raise the new debt.

Value Established Through Sum of Liquidation Proceeds
Stores closings and inventory liquidation occurred in two phases. After filing bankruptcy, closure of at least 200 Borders stores was announced. 226 stores were
shuttered in phase one of the liquidation Borders then announced closure of the remaining 399 stores after it could not find a going-concern buyer in a July 2011
auction. The inventory for the 399 stores was sold by liquidators, including Hilco Merchant (proceeds undisclosed). Resources LLC, Gordon Brothers Retail Partners,
SB Capital Group LLC and Great American. Through the liquidation agency agreement, Borders was to receive 72% of the cost value of its merchandise and 4% of the
gross proceeds plus 50% of remaining sale proceeds. The cost value of the merchandise was between $350 million and $395 million for the remaining 399 stores.
Borders would also receive 4% of the gross sale proceeds under the terms of the agency agreement.
After that, the remaining sale proceeds would be split 50-50 between Borders and the liquidators.
The phase two liquidation sales were expected to generate between $252 million and $284 million of cash. Intellectual property and leases were sold separately.
Assuming the per store inventory liquidation proceeds for the first 226 store closings was equal to the per store inventory liquidation proceeds in the second round,
($631,578–$711,779 per store) would result in first round proceeds of $142.7 million to $160.8 million, for an combined total inventory liquidation cash proceeds of
$394.7 million–$444.8 million for both rounds of store closings.
Unsuccessful Effort to Sell Borders as a Going Concern to a Stalking Horse Bidder

BB Brands LLC, a subsidiary of Direct Brands LLC proposed to purchase 399 remaining Borders stores as a going concern for $215 million cash, plus the assumption of
$220 million of liabilities and an agreement and to provide up to $15 million for Chapter 11 expenses. There were no other offers to purchase the remaining 399 stores
as a going concern in the July 19, 2011, auction. The stalking horse bidder ultimately did not proceed with the bid. The decision to liquidate the remaining stores was
made immediately after the auction date.

The Chapter 7 liquidation alternative would have resulted in lower creditor recoveries because of trustee fees and because it would have been a fire sale rather than an
orderly liquidation.
ªPrepetition EBITDA is 10-K for fiscal year ended Jan. 29, 2011.
Source, unless otherwise noted: First amended disclosure statement dated Nov. 2, 2011.

September 28, 2016
Leveraged Finance
Borders Group Inc. (Continued)

Allowed Projected Equivalent RR Secured Unsecured Subordinated New Options/
Claim Seniority Claim Type Claims Recovery (%) Category Cash Notes Notes Notes Equity Warrants
DIP or Other Debtor in Possession Facility
Administrative 0 100.0 RR1 155 — — — — —
$970.5 Revolving Credit Facility
Secured and $48.6 Term Loan 0 100.0 RR1 245 — — — — —
Unsecured General Unsecured Claims 812–850 4.0–10.0 RR6 32 — — — — —
Intercompany Intercompany Claims 0 0.0 RR6 — — — — — —
Estimated Claims 831 Recoveries 432 0 0 0 0 0

DIP or Other Debtor in Possession Facility • The $155 million of remaining borrowings under the DIP were paid in full in cash by the joint venture partners with
Administrative proceeds from the store liquidation sales prior to the disclosure statement date. The repayment was made on July
22, 2011, and there were no DIP borrowings as of the disclosure statement date.
Secured $970.5 Revolving Credit Facility • The $196.05 million borrowings under the $970.5 million revolving credit facility and the $48.6 million term loan
and $48.6 Term Loan borrowings were repaid on Feb. 18, 2011, with drawings under the DIP facility. There were no remaining revolver
claims as of the disclosure statement date.
• The revolver was secured by a first priority security interest in all of the inventory, accounts receivable, cash and
cash equivalents and certain other collateral of the borrowers and guarantors, a first priority pledge of equity
interests in certain subsidiaries, and a second priority security interest in equity interests in certain other
subsidiaries, intellectual property, equipment and certain other property.
• The term loan was secured by a first-priority interest in Borders Group, Inc.’s ownership interests in certain
subsidiaries, intellectual property (subject to certain subordination provisions), and the fixed assets of the
borrowers and guarantors under the term loan, and by a second priority security interest in all of the other collateral
securing the revolver.
Unsecured General Unsecured Claims • General unsecured claims included $303 million of vendor inventory financing.
Intercompany Intercompany Claims • Holders received no distributions under the plan of reorganization.

September 28, 2016
Leveraged Finance
Borders Group Inc. (Continued)

Cash on Filing Date Not disclosed. There was cash on hand of $81 million as of Feb. 26, 2011, according to the Monthly
Operating Report for the period ending March 26, 2011.
Prepetition Bank Facility Commitments $970.5 million senior secured revolving facility and $48 million senior secured term loan (remaining term
loan balance).
Prepetition Bank Facility Borrowings on Filing Date Approximately $196.05 million was outstanding under the $970.5 million senior secured revolver plus the
$48.6 million term loan.
Was the DIP a New Money Facility or Roll Up of a $505 million DIP facility was a partially a rollup facility and partially a new money facility.
Disclosure or Estimate of Total Administrative and Priority Not available. Payments to professionals totaled $28.6 million from the filing date though Nov. 26, 2011,
Claims for Entire Period of Bankruptcy Proceeding? according to the Monthly operating report filed Dec. 20, 2011.
If Yes, Admin. + Priority as % of Enterprise Value? Not applicable.
Executory Contracts Details not disclosed.
Deficiency Claims No, secured lenders were paid in full.
Contingent Claims Yes, disputed claims. Claims to be settled with proceeds of the liquidating trust.
Intercompany Claims Intercompany claims received no distributions. They were eliminated.
Pension Claims/Motions Borders had no defined benefit pension plan as per the 2010 10-K.
If Yes, Recipient Class Senior secured revolver and term loan.
DIP – Debtor in possession.

September 28, 2016
Leveraged Finance
Brookstone, Inc.

Subsector Specialty Retailer Key Driver Untenable Capital Structure
Prepetition Ticker Symbol Not Publicly Traded
Emergence Parent Company Spencer Spirit/Not Public 12-Month Period Amount
Name/Ticker Prepetition EBITDA FY 2013 11
Post-Emergence EBITDA Forecast FY 2015 31
Bankruptcy Summary
Court District Delaware High 147
Duration (Months) 3 Midpoint EV/Post-Emergence EBITDA Estimate (x) 4.8
(as Going Concern) Petition Date Versus Emergence Date
Resolution Acquired, Merged or Sold Consolidated Leverage (x) 16.4 3.4

The Brookstone chain of 242 stores, an e-commerce website, wholesale and catalog business was highly leveraged for a number of years prior to filing and experienced
declining same store sales. Efforts were made to reduce the debt burden, including a 2010 exchange offer for second-lien notes and a 2011 repurchase of other
outstanding notes. Brookstone was unable to increase revenues and reduce costs to the degree needed to satisfy a looming debt maturity of the 13% second-lien notes
in October 2014 and the credit facility maturity date that would move up to the date 105 days prior to the second-lien note maturity date if the notes were not repaid by
that date. For fiscal year 2013, net sales decreased 7.4% to $481 million, comparable-store sales decreased 2.8% and EBITDA decreased 42% to $10.7 million.
Restructuring alternative discussions were started with creditors and advisors after the lackluster FY 2013 holiday season.

Acquisition Price Established Company Value
SPB Acquisition LLC, an affiliate of Spencer Spirit Holdings (Spencer’s) purchased all of the common stock of the reorganized company for $146.5 million. The
consideration included cash of $120 million, $7.5 million of notes and the assumption of certain liabilities (gift cards, sales returns, retiree health benefits, etc.). A
financial advisor conducted a sale marketing process in which there were eight initial nonbinding indications of interest ranging from $75 million to $110 million and then
two rounds of bids. A plan sponsorship and stock acquisition agreement was negotiated prior to the filing date and the Spencer’s offer was used as the stalking horse bid
in a court-supervised auction held on June 2, 2014 following a multiple-round sale process. The prenegotiated plan was supported by consenting noteholders.

The hypothetical liquidation alternative valuation estimate was a range of $37.6 million–$93.8 million. The valuation was based on discounts to the asset book values in
the projected balance sheet as of June 30, 2014. Book values and percentages applied included:
• Inventory of $56.2 million at 30%–60% of book value
• Brand value and intellectual property assigned a value estimate range of $10 million–$40 million
FY – Fiscal year.
Source, unless otherwise noted: Disclosure statement for the revised first modified joint Chapter 11 plan of reorganization dated May 16, 2014.

September 28, 2016
Leveraged Finance
Brookstone, Inc. (Continued)

DIP and Priority DIP and Other Priority 84 100.0 RR1 85 — — — — —
Secured $110 Million Revolver and 0 100.0 RR1 — — — — — —
$12.3 Million Term Loan due
Dec. 30, 2016
Secured 13% Second-Lien Notes 137 34.2 RR4 38 — 8 — — —
Equity Interests Not Available 0.0 RR6 — — — — — —
New Borrowings at Emergencea 103 — — — — — — —
Emergence Date 0 — — — — — — —

DIP and Priority DIP and Other Priority • Fitch claim estimate of $85 million, including prepetition revolver borrowings and term loans that were rolled up
into DIP, new money DIP borrowings and administrative expenses.
• Liquidation analysis exhibit shows $84 million of DIP borrowings in the Chapter 11 versus Chapter 7
comparison.
Secured $110 Million Revolver and • Petition date borrowings of $34.1 million under the revolver, $12.3 million of term loan and $4.7 million of
$12.3 Million Term Loan due letters of credit were rolled up into the DIP facility shortly after the filing date.
Dec. 30, 2016 • Paid in full in cash.
• Unimpaired
• Maturity date was the earlier of Dec. 30, 2016 or 105 days prior to the maturity of the second-lien note due
Oct. 15, 2014.
Secured 13% Second-Lien Notes • Secured by second lien on the assets that secure the credit facility, except those not secured by real estate
assets.
Unsecured General Unsecured Claims • The recovery range assumes that the total amount of claims is $9 million–$11 million and Spencer’s elects to
not exercise its right to reject up to 75 store leases.
Equity Interests • No recovery.
• Assumed to reject the plan.
a
Per disclosure statement Exhibit B, Financial Projections. RR – Recovery Rating. DIP – Debtor in possession.
Source, unless otherwise noted: Disclosure statement for the revised first modified joint Chapter 11 plan of reorganization dated May 16, 2014.

September 28, 2016
Leveraged Finance
Brookstone, Inc. (Continued)
Cash on Filing Date $2.66 million as of March 31, 2014 per Exhibit B to disclosure statement.
Prepetition Bank Facility Commitments $110 million senior secured revolver credit facility and $12.3 million of remaining borrowings under a term loan
that was originally $20 million.
Prepetition Bank Facility Borrowings on Filing Date $34 million of borrowings and $4.7 million letters of credit under the $110 million revolver and $12.3 million
term loan.
Was the DIP a New Money Facility or Roll Up of a The $96.25 million DIP was used to roll up the first-lien facility borrowings as well as a portion of the
Prepetition Facility? prepetition notes (that were held by DIP lender) and also included a $6.25 million new money term loan.
Executory Contracts The plan sponsor (Spencer’s) had the right to reject up to 75 store leases under the stock purchase
agreement. The exact number of store leases rejected is not available; however the liquidation alternative
valuation shows 10 assumed store rejections under the Chapter 11 plan with $2 million of claims.
Deficiency Claims Yes. $70 million–$80 million of the general unsecured claims consist of deficiency claims relating to the
$137.3 million of second-lien notes outstanding.
Contingent Claims and/or Contingent Recoveries A reserve for disputed claims was established.
Intercompany Claims None noted.
Pension Claims/Motions The defined benefit pension plan was expected to be terminated, but the disclosure statement indicated that
the acquirer may choose to continue the plan. The PBGC was expected to file or had filed claims for the
unfunded benefit liabilities (the amount of the claim was not provided).
Recipient and Comments General unsecured.
Source: Fitch Ratings, company disclosure statement dated May 16, 2014.

September 28, 2016
Leveraged Finance
BSCV, Inc. (formerly Boscov’s Inc.)


Subsector Department Stores Key Driver Untenable Capital Structure
Emergence Parent Company Name/Ticker Boscov’s, Inc./Privately Held Financial Profile
Prepetition EBITDA N.A. Undisclosed
Bankruptcy Summary Post-Emergence EBITDA Forecast
a
2010 49
b
Confirmation or Conversion Date 9/17/09 Low N.A.
Effective Date 9/30/09 High N.A.
Assets (as Going Concern) Petition Date Versus Emergence Date
Petition Datec Emergence Dated
Postconfirmation Liquidating Trust Yes
Total Debt 303 257
Consolidated Leverage (x) N.A. 5.2

Several key factors led to Boscov’s bankruptcy petition. First, the collapse of the housing market and the weak economy led to a reduction in consumer discretionary
spending. Second, poor credit market conditions made it difficult for Boscov’s to finance the purchase of inventory and adversely affected liquidity. Third, the tight liquidity
caused trade creditors to impose stricter terms, including cash on delivery or cash in advance for goods. This trade credit burden caused further erosion in cash and
culminated in the Aug. 4, 2008, bankruptcy filing.
Following the bankruptcy petition, the debtor received bankruptcy court approval to close 10 underperforming stores and liquidate the merchandise, furniture, and fixtures
in those 10 stores; liquidation occurred in October 2008. This downsizing improved performance and raised proceeds of $35 million, but Boscov’s still required additional
equity or a sale of all assets to achieve long-term viability for its remaining operations. The bid to purchase the company from BLF provided this new capital.

Liquidation and Asset Sale
Most of the Boscov’s stores were sold to the founding Boscov family (BLF) as a going concern, and 10 underperforming stores were liquidated and sold prior to the
going-concern sale. The auction sale price for the company’s stores that continued to operate was $275 million–$300 million, according to a report from The Associated
Press published on Nov. 18, 2009. The §363 sales took place in two stages:
1) There was an auction to handle the liquidation of the merchandise and fixtures in 10 under-performing stores that were closed (and the 10 store leases rejected). An
auction was held, and the winning bid was a minimum of approximately $35 million for the store merchandise and fixtures. This sale to a liquidator agent closed in
October 2008.
2) The remaining company was sold to the buyer, BLF Acquisition (BLF), which would operate the remaining 39 stores as a going concern. There were two bids: the
stalking horse bid by Versa Capital and the winning BLF bid (by Boscov family). The BLF bid was approximately $290 million.
The sum of the proceeds from the $290 million going-concern sale and the $35 million liquidation sale provides a Fitch Ratings estimate of enterprise value of
$325 million.
Chapter 7 Liquidation Alternative

Trustee fees and other costs of a Chapter 7 would have reduced recoveries compared to Chapter 11 based on the Chapter 7 liquidation analysis.
a
Source is NatCity estimate prepared for BLF Acquisition, Inc. in Debtor’s Motion to Support Sale of All Assets, dated Nov. 10, 2008. bSource is Associated Press
article, dated Nov. 21, 2008 “Judge Okays Sale of Boscov’s to Family.” The Philadelphia Inquirer reported the value of the sale at $305 million on Nov. 22, 2008.
c
$303 million petition date debt is an estimate that is based on the sum of $157 million first-lien revolving loans and letters of credit, $38 million second lien loans,
$8 million Tom’s River mortgage, and “at least $100 million of trade debt.” dThe Emergence Date debt is a Fitch estimate based on the Exhibit D Source and Uses to
the Debtors Statement of Support for Motion to Sell Substantially All Assets, dated Nov. 10, 2008. DIP – Debtor in possession. N.A. – Not applicable.
Source, unless otherwise noted: Company disclosure statement dated June 15, 2009, second amended disclosure statement dated July 22, 2009.

September 28, 2016
Leveraged Finance
BSCV, Inc. (formerly Boscov’s Inc.) (Continued)

Equivalent
Claim Allowed Projected RR Secured Unsecured Subordinated New Options/
Seniority Claim Type Claims Recovery (%) Category Cash Notes Notes Notes Equity Warrants
DIP $250 Million DIP Facility N.A. 100.0 RR1 — — — — — —
$370 Million First-Lien Bank
Secured Facility 0 100.0 RR1 122 — — — — —
$60 Million Second-Lien Bank
Secured Facility 0 100.0 RR1 38 — — — — —
Secured Tom’s River Mortgage Facility 8 100.0 RR1 — 8 — — — —
Unsecured Trade Debt 110–130 7.6–13.6 RR6 7.6–16.3 — — — — —
Intercompany Intercompany Claims N.A. 0 RR6 — — — — — —
Equity Equity Claims N.A. 100.0 RR1 — — — — — —
Estimated Claims 118–138 — Recoveries 168–176 8 0 0 0 0
Claim
Seniority Claim Type Description
DIP $250 Million DIP Facility • DIP borrowings (balance undisclosed) were paid in full in cash with proceeds of the company sale. The DIP was
used to refinance the borrowings under the prepetition first-lien bank facility. The usage on the petition date of the
first-lien facility included principal of $122 million plus letters of credit of $35 million, which were rolled into the DIP as
rollovers became due.
Secured $370 Million First-Lien Bank • The first-lien facility debt was unimpaired. Petition date borrowings of $122 million under the first-lien bank facility
Facility were rolled into the DIP facility and paid in full in cash as borrowings became due with DIP loans.
Secured $60 Million Second-Lien Bank • The second-lien bank debt was unimpaired and paid in full in cash with proceeds from the sale of the company to
Facility BLF Acquisition, Inc. The petition date balance was $38 million.
Secured Tom’s River Mortgage Facility • The Tom’s River mortgage facility was assumed by BLF Acquisition on emergence.
Unsecured Trade Debt • As of the petition date, the debtors estimated they owed at least $100 million of trade debt. The estimated range of
claims as of the disclosure statement date was $110 million–$130 million. Holders of unsecured claims received
partial recovery in the form of cash distributions from the Distribution Trust.
Intercompany Intercompany Claims • No property was distributed to intercompany claims.
Equity Equity Claims • Each holder of an old common stock interest retained such interest. The company is a privately held company with
common stock held through trusts by the Boscov and Lakin families.

September 28, 2016
Leveraged Finance
BSCV, Inc. (formerly Boscov’s Inc.) (Continued)

Cash on Filing Datea $8 million as of Aug. 1, 2008.
Prepetition Bank Facility Commitments $340 million last in/first out first-lien revolving credit facility, $30 million first in/first out first-lien revolving credit
facility, with a $50 million letter of credit sublimit. The revolving facilities were five-year commitments that were
scheduled to mature in January 2011.
Prepetition Bank Facility Borrowings on Filing Date $122 million first-lien facility borrowings plus $35 million letters of credit. Boscov’s also had $38 million remaining
balance on a $60 million second-lien term loan and an $8 million mortgage.
Was the DIP a New Money Facility or Roll Up of a The DIP was used as a roll-up facility of the first-lien prepetition bank debt. All prepetition first-lien bank facility
Prepetition Facility? borrowings were paid in full as they became due with DIP facility borrowings. The second-lien debt was not rolled
into the DIP. The second-lien debt was paid in full with proceeds from the sale of the assets to BLF.
Executory Contracts Yes. Amounts not disclosed.
Deficiency Claims No, secured lenders were unimpaired.
Contingent Claims Not available.
Intercompany Claims There were no recoveries on intercompany claims.
Pension Claims/Motions Not disclosed.
Postpetition Interest? No
If Yes, Recipient Class Not applicable.
a
Source is First Monthly Operating Report dated Aug. 19, 2008. DIP – Debtor in possession.

September 28, 2016
Leveraged Finance
Circuit City Stores, Inc.


Subsector Consumer Electronics Key Driver Deep Cyclical Trough
Prepetition Ticker Symbol CC
Petition Date Assets 3,746
Emergence Parent Company Name/Ticker N.A. Financial Profile
Prepetition EBITDAa 2/1/08 (161)
Bankruptcy Summary Post-Emergence EBITDA Forecast Did Not Emerge N.A.
Did All Entities in the Group File? Yes Enterprise Value (EV) Range (or Asset Value Range)b
Plan Proposed by Joint Plan of Debtor and Low 1,334
Unsecured Creditors Committee
High 1,397
Court District Virginia
Midpoint EV (Value) 1,366
Substantive Consolidation Yes
Equity Value Range
Confirmation or Conversion Date 9/8/10
High 0
Effective Date 11/1/10
Midpoint EV/Post-Emergence EBITDA Estimate N.A.
Duration (Months) 22
Assets (as Liquidation)
Resolution Liquidation (Under Chapter 11) Consolidated Leverage (x) (5.6) N.A.

Events that led to the Circuit City bankruptcy included the severe recession and credit crisis that adversely affected sales and reduced credit availability. Although the
company tried to improve its relationship and credit standing with vendors, given the impact of the global economic crisis, it was unable to restore vendor confidence.
Many of the company’s merchandise and other vendors tightened credit terms. Specifically, various merchandise vendors restricted the company’s available trade credit
and reduced payment terms; in some instances, trade terms changed to cash in advance. The requirement to pay cash in advance for inventory significantly strained
operations because the company found it more difficult to keep adequate stock in its stores.
Faced with these circumstances, Circuit City also found that additional liquidity was unavailable through traditional credit market channels due to the widespread financial
crisis. During the months leading up to the petition date, consumers were increasingly concerned about rising unemployment and the general tightening of the credit
markets, in which they were unable to borrow funds through credit cards or home-equity loans to purchase household and other electronic products. The credit crisis had
a drastic effect on sales, because 70% of the company’s sales were generated through credit card purchases.

Liquidation Proceeds Used as Estimate
(As of Aug. 24, 2009) Low High
Estimated proceeds from sale of assets remaining as of Aug. 24, 2009, in liquidation sale 488 548
Wind-down expenses 53 50
Net remaining estimated proceeds available for distribution in management’s liquidation analysis 436 499
Plus proceeds from asset sales completed from petition date to liquidation analysis date (Aug. 24, 2009)
used to repay DIP loans prior to the disclosure statement date 898 898
Estimate of Total Liquidation Value 1,334 1,397
Notes
The $436 million value in the liquidation analysis exhibit to the disclosure statement was estimated on Aug. 24, 2009, by which date much of the liquidation was
completed. The liquidation estimate include estimated cash of $275 million, and low-end asset value estimates: account receivable of $59.7 million, income tax
receivable of $52.7 million, and investments in subsidiaries of $72.9 million. Wind-down expenses include 3% trustee fee ($14.7 million–$16.4 million), operating
expenses and professional fees. The plan provided for an orderly liquidation of the remaining assets of the debtor. It should be noted that the $898 million DIP
borrowings were repaid with proceeds of asset sales prior to the publication of liquidation analysis exhibit to the disclosure statement, dated Aug. 24, 2009. The total
value of the company includes the $898 million of asset sale proceeds received between the petition date and the Aug. 24, 2009, liquidation analysis and excludes
administrative costs paid from the petition date to the Aug. 24, 2009, liquidation analysis.
Circuit City tried to sell itself as a going concern in an auction but received no viable going-concern bids. The company and other parties then determined liquidation
would result in the best recoveries for creditors. There was no going-concern basis valuation in the disclosure statement.
a
Source is Circuit City 10-K dated April 28, 2008. bTotal estimated remaining value from sale of assets as of liquidation analysis date plus $898 million of prior debtor-in-
possession repayments with liquidation proceeds. DIP – Debtor in possession. N.A. – Not applicable.
Source, unless otherwise noted: Company disclosure statement dated Sept. 24, 2009.

September 28, 2016
Leveraged Finance
Circuit City Stores, Inc. (Continued)

$1,100 Million DIP Revolving
DIP Credit Facility 0 100.0 RR1 898 — — — — —
$1,300 Million Revolving Credit
Secured Facility 0 100.0 RR1 — — — — — —
Secured Other Secured Claims 20 100.0 RR1 20 — — — — —
Unsecured General Unsecured Claims 1,800– 0.0–13.5 RR6 0–270 — — — — —
2,000
Equity Equity Claims N.A. 0
Estimated Claims 1,800– Recoveries 918–1,188 0 0 0 0 0
2,020
New Borrowings at Emergence 0 —— — — — — — —
Emergence Date 0 —— — — — — — —

DIP $1,100 Million DIP Revolving • The DIP was secured by a superpriority administrative lien.
Credit Facility • Borrowings of $898 million under the $1,300 million prepetition asset-based facility were rolled up into the
$1,100 million DIP.
• The DIP commitment decreased as operations were wound down and borrowings were repaid with proceeds
from liquidation sales. All DIP borrowings had been repaid with asset sale proceeds as of the disclosure
statement date.
Secured $1,300 Million Revolving Credit • $898 million borrowings as of the petition date were paid in full through conversion to DIP roll-up facility
Facility borrowings. The DIP loans were, in turn repaid in full with proceeds of the liquidation sales.
Secured Other Secured Claims • Paid in full.
Unsecured General Unsecured Claims • Excludes convenience claims, which recovered 10% of their claim amount.
Equity Equity Claims • Received $0 distributions.

September 28, 2016
Leveraged Finance
Circuit City Stores, Inc. (Continued)

a
Cash on Filing Date $48 million on Nov. 8, 2008
Prepetition Bank Facility Commitments $1,300 million asset based revolving credit facility with first-priority lien on goods, intangibles, accounts
receivable and inventory.
Prepetition Bank Facility Borrowings on Filing Date $898 million borrowed under $1,300 million revolving credit facility on the petition date.
Was the DIP a New Money Facility or Roll Up of a Prepetition borrowings of $898 million under the $1,300 million facility were rolled into the DIP. All DIP
Prepetition Facility? borrowings were repaid with liquidation proceeds prior to the effective date. All prepetition executory contracts
were rejected, except those listed in Exhibit C of the plan (which primarily consist of insurance agreements).
Executory Contracts Rejection claim amount undisclosed.
Deficiency Claims No, secured creditors were repaid in full with DIP facility loans, and DIP loans were repaid with
liquidation proceeds.
Contingent Claims Not disclosed.
Intercompany Claims Discharged, no recoveries
Pension Claims/Motions Debtor terminated the pension plan; there were alleged claims of $119.2 million for underfunding and
termination. Debtor to propose settlement to Pension Benefit Guaranty Corporation (PBGC) for a lesser amount
(undisclosed) with hearing on matter prior to or concurrent with the confirmation hearing.
Recipient Gift card holders received 10% of face value
a
Source is monthly operating report for Nov. 8–30, 2008 filed in 8-K dated Jan. 28, 2009. DIP – Debtor in possession.

September 28, 2016
Leveraged Finance
Coldwater Creek Inc.


Subsector Women’s Specialty Apparel Retailer Key Driver Untenable Capital Structure
Prepetition Ticker Symbol CWTR
Emergence Parent Company N.A./Liquidated 12-Month Period Amount
a
Name/Ticker Prepetition EBITDA 11/2/13 (31)
Post-Emergence EBITDA Forecast Assets Liquidated N.A.
Bankruptcy Summary
Substantive Consolidation Yes Midpoint EV (Value) 264
Confirmation or Conversion Date 9/17/14 Low —
Effective Date 10/1/14 High —
Duration (Months) 5 Midpoint EV/Post-Emergence EBITDA Estimate (x) Not Applicable
Postconfirmation Liquidating Trust Yes Total Debtb 75 0
Resolution Liquidation (Under Chapter 11) Consolidated Leverage (x) (2.4) Not Applicable

Deteriorating operating trends, exacerbated by the economic downturn beginning in 2007, led to significant inventory buildup. These trends, coupled with rapid
expansion in the number of stores, multiple management changes and failed strategic shifts, resulted in the filing of Coldwater Creek Inc. (Coldwater). After
unsuccessfully attempting a turnaround of the business from 2011 to 2013, Coldwater engaged in a process to sell the entire business in 2013. Late in 2013,
management became concerned that it would not be able to service its debt and operate the business if the negative trends continued, and the company expanded the
sale mandate to include a broad review of all strategic alternatives. Ultimately, no interested buyers emerged out of the strategic review, and proposals to refinance the
term loan did not gain market support. Coldwater once again implemented a turnaround plan in order to restructure the business but concluded that it would be unable to
reorganize on a stand-alone basis and elected to liquidate under a Chapter 11 filing.

Liquidation Value Estimate Based on Sum of Distributions to Claimholders
Fitch estimates a rough total liquidation value of $264 million based on the sum of claimholder distributions. Prior to the petition date, the company retained Hilco
Merchant Resources LLC and Gordon Brothers Retail Partners LLC to conduct going-out-of-business sales and liquidate the company’s inventory and other assets,
including intellectual property, spa and a portion of leasehold interests. This liquidation agency agreement served as the stalking horse bid in a bankruptcy auction and
guaranteed the debtor’s receipt of 97% of the cost of inventory, with any proceeds in excess of this guaranteed minimum amount to be shared 50-50 between the
company and the liquidation agents (after payment of the agent’s fee).
Total store liquidation proceeds were estimated at $220.5 million and comprised most of the value. Other assets included $7 million of fee-owned real estate and
$27 million of value from intellectual property assets.

If the liquidation had been conducted via a Chapter 7 filing, additional administrative expenses such as the trustee fees would have reduced recoveries for claimholders
relative to a Chapter 11 liquidation.
a
Prepetition EBITDA obtained from company 10-Q for the quarter ended Nov. 2, 2013. bPetition date debt is Fitch estimate and assumes $10 million of asset-based
loan borrowings.
Source, unless otherwise noted: Disclosure statement dated Aug. 8, 2014.

September 28, 2016
Leveraged Finance
Coldwater Creek Inc. (Continued)

DIP and Priority $75 Million DIP Facility and 10 100.0 RR1 152 — — — — —
Administrative Claims
Secured $70 Million Senior Secured ABL 0 100.0 RR1 — — — — — —
Secured $65 Million Senior Secured PIK 0 100.0 RR1 91 — — — — —
Term Loan (Original Amount)
Unsecured Guaranteed General Unsecured 71 17.3 RR5 12 — — — — —
Claims
Unsecured General Unsecured Claims 75 10.5 RR5 8 — — — — —
Intercompany Intercompany Claims 0 0.0 RR6 — — — — — —
Debt of Nonfiling Affiliates on 0 — — — — — — — —
Emergence Date

DIP and Priority $75 Million DIP Facility and • The DIP ABL facility had senior secured superpriority claims.
Administrative Claims • $36.6 million of DIP borrowings made shortly following the petition date were repaid prior to the disclosure
statement using asset sale proceeds, and there were no remaining facility borrowings.
• Fitch estimates administrative claims remaining of $10 million. The liquidation waterfall analysis based on the
company forecast dated July 12, 2014 indicates total administrative costs of $115.5 million (includes operating
losses), and Fitch assumes that $105.5 million of these costs were paid prior to the effective date, leaving $10
million of remaining administrative claims.
Secured $70 Million Senior Secured ABL • Borrowings under the senior secured ABL were fully repaid with a drawdown on the DIP facility.
• Petition date borrowings not provided.
• Secured by a first lien on inventory, credit card receivables and certain other assets.
Secured $65 Million Senior Secured PIK • All term-loan borrowings, including the PIK interest, were repaid prior to the disclosure statement date (repaid
Term Loan (Original Amount) July 24, 2014) using a portion of the liquidation asset sale proceeds.
• Secured by a second lien on inventory and credit card receivables and a first lien on the remaining assets.
Unsecured Guaranteed General Unsecured • Guaranteed general unsecured claims were estimated to receive 17.3% of their allowed claims.
Claims
Unsecured General Unsecured Claims • General unsecured claims were estimated to receive distributions of10.5% of their allowed claims.
Intercompany Intercompany Claims • All intercompany claims were canceled.
DIP – Debtor in possession. ABL – Asset-based loan. PIK – Payment in kind.
Source, unless otherwise noted: Disclosure statement dated Aug. 8, 2014.

September 28, 2016
Leveraged Finance
Coldwater Creek Inc. (Continued)

Cash on Filing Date $232,000
Prepetition Bank Facility Commitments $70 million senior secured ABL with availability based on a borrowing base formula.
Prepetition Bank Facility Borrowings on Filing Date Not available.
Was the DIP a New Money Facility or Roll Up of a $75 million DIP was used to repay prepetition ABL loans and also provided new money.
Other Notable Issues The debtors had $445 million of state and federal net operating losses but were unable to monetize these
carryforwards because they liquidated operations and did not continue as a going concern.
Executory Contracts Approximately $2 million was raised for the bankruptcy estate through the sale or termination of unexpired
leases.
Deficiency Claims No, secured debt was unimpaired.
Contingent Claims and/ A liquidating trust was formed to resolve disputed claims and investigate and pursue causes of action.
or Contingent Recoveries
Intercompany Claims Intercompany claims were canceled and holders received no distributions.
Pension Claims/Motions No
Recipient and Comments Paid to certain unsecured claims. The substantive consolidation settlement provides for a 65% increase in the
amount of guaranteed claims and a 20% increase in Coldwater/Aspenwood unsecured claims. Secured term-
loan lenders reduced the face amount of their claims by $4.4 million under the global settlement.
DIP – Debtor in possession. ABL – Asset-based loan.
Source: Fitch Ratings, disclosure statement dated Aug. 8, 2014.

September 28, 2016
Leveraged Finance
Eddie Bauer Holdings, Inc.


Fitch Industry Classification Retail Key Driver Untenable Capital Structure
Subsector Specialty Retail Key Driver Deep Cyclical Trough
Prepetition Ticker Symbol EBHI
Prepetition EBITDA 1/3/09 47
c
Company Was Sold N.A.
a
Duration (Months) 9 Midpoint EV/Post-Emergence EBITDA Estimate N.A.
Assets (Going Concern) Petition Date Versus Emergence Date
Total Debt 427 0
Resolutionb Acquired, Merged or Sold
Consolidated Leverage 9.2 N.A.

Spiegel, Inc. acquired Eddie Bauer Corp. in 1988. Spiegel filed Chapter 11 in 2003 and formed Eddie Bauer Holdings, Inc. (EBHI) in connection with the 2003
bankruptcy. EBHI borrowed $300 million under a senior secured term loan facility guaranteed by its subsidiaries in 2005 and used the proceeds to repay Spiegel
creditors but did not use proceeds to fund its own operations. In April 2007, EBHI refinanced its debt into a $225 million term loan due 2014 and $75 million of
convertible notes.
EBHI struggled with the significant debt added in connection with the creditor payments made during the Spiegel bankruptcy and with brand identity erosion that began
during the Spiegel ownership. This led to a decrease in profitability, which was exacerbated during the recession. Bank facility leverage covenants became tighter.
These factors collectively led to the Chapter 11 filing.

Section 363 Asset Sale Proceeds Established Value
Eddie Bauer’s assets were sold in a bankruptcy §363 auction sales process for $286 million in August 2009. The sale price establishes the company’s estimated value.
The proceeds from the auction sale were used to repay DIP borrowings and other administrative and priority claims, as well as a portion of the claims of senior secured
term lenders and general unsecured creditors.
On June 16, 2009, Eddie Bauer Holdings Inc. (EBHI) and substantially all subsidiaries entered into an agreement with CCMP Capital Advisors (CCMP) under which
EBHI would sell substantially all of its assets to CCMP in a §363 sale for a stalking horse bid of $202 million, subject to a bankruptcy auction and bidding procedure. In
July 2009, the EBHI auction was held and another bidder, Golden Gate, won the auction with a superior cash bid of $286 million, plus the assumption of certain
liabilities (such as honoring gift cards). The Golden Gate going-concern bid was approved by the court and the sale closed in August 2009.

A Chapter 7 liquidation would have resulted in lower recoveries for creditors due to associated trustee fees.
a
Separate filing in Canada for Canadian affiliates. bCorrects case outcome published by Fitch June 7, 2012. cPrepetition EBITDA is 2009 10-K. DIP – Debtor in
possession. N.A. – Not applicable.
Source, unless otherwise noted: Disclosure statement dated Jan. 26, 2010.

September 28, 2016
Leveraged Finance
Eddie Bauer Holdings, Inc. (Continued)

Secured $100 Million DIP 0 100.0 RR1 92 — — — — —
Term Lender Secured
Secured Loan 203 85.0–95.0 RR2 183 — — — — —
$75 Million 5.25%
Unsecured Convertible Notes N.A. 0 RR6 — — — — — —
Unsecured General Unsecured 105–144 2.0–17.0 RR6 11 — — — — —
Intercompany Intercompany Claims N.A. 0 RR6 — — — — — —
Equity Equity Claims 0 0 — — — — — — —
New Borrowings at
Emergence 0 — — — — — — — —
Debt of Nonfiling Affiliates
on Emergence Date 0 — — — — — — — —

Secured $100 Million DIP • The $100 million DIP was a borrowing base revolving credit facility that had superpriority administrative status and a
priming first lien on assets.
• There were no DIP borrowings as of the disclosure statement publication date.
• With proceeds from the §363 asset sale, the DIP lender loans were paid in full and the prepetition term loan lenders
were paid an initial $135 million in partial satisfaction of their claims (with additional payments from the liquidating
trust).
• The Fitch cash repayment amount estimate is based on the $286 million auction sale price.
Secured Term Lender Secured Loan • The term loan recovery rate is assumed to be 90%, which is the midpoint of estimated range in disclosure statement.
• Lenders received cash distributions from the sales proceeds of with additional proceeds from the liquidating trust.
Unsecured $75 Million 5.25% • The $75 million convertible noteholder claims received $0 recovery, and therefore, were deemed to have voted to
Convertible Notes reject the plan.
Unsecured General Unsecured • The Fitch estimate of $11 million cash distributed to the general unsecured claimholders assumes $125 million was
the final amount of allowed general unsecured claims and results in a recovery rate of 9%.
Intercompany Intercompany Claims • The intercompany claims received $0 recovery and therefore were deemed to reject plan. This excludes nondebtor
affiliate claims.
Equity Equity Claims • No recovery.
RR – Recovery Rating. DIP – Debtor in possession. N.A. – Not available/applicable.

September 28, 2016
Leveraged Finance
Eddie Bauer Holdings, Inc. (Continued)

Cash on Filing Date Approximately $9 million (held at Eddie Bauer Inc. subsidiary level). (Source: Monthly operating statement filed
as 8-K on July 30, 2009.)
Prepetition Bank Facility Commitments EBHI had a borrowing base revolving credit facility with $53 million available, $32 million drawn, and $9 million
letters of credit on April 4, 2009 (no disclosure of filing date borrowings), and a $225 million senior term loan
facility.
Was the DIP a New Money Facility or Roll Up of a The DIP was obtained from existing prepetition revolving lenders. It is not clear whether it was a roll in.
Executory Contracts Yes; amount not disclosed.
Deficiency Claims Yes; undersecured portion of general secured claims were treated as general unsecured claims.
Contingent Claims None
Intercompany Claims Canceled, $0 recovery.
Pension Claims/Motions The pension plan was terminated in August 2009 and taken over by the Pension Benefit Guaranty Corporation
(PBGC), which was expected to fund the $22 million plan funding shortfall and pay the benefit obligations.
There was no information on the amount of the PBGC claim.
If Yes, Recipient Class —
Recipient General unsecured.

September 28, 2016
Leveraged Finance
Fairway Group Holdings Corp.


Fitch Industry Classification Supermarkets and Drug Stores Key Driver Untenable Capital Structure
Subsector Regional Supermarket Chain Key Driver Flawed Business Model or Obsolete Product
Prepetition Ticker Symbol FWMHQ
Emergence Parent Company Fairway Group Holdings/Privately Held 12-Month Period Amount
b
Name/Ticker Prepetition EBITDA FYE 3/29/15 42
Post-Emergence EBITDA Forecast FYE 3/31/18 24
Bankruptcy Summary
a
Court District Southern District of New York High 165
Duration (Months) 1 Midpoint EV/Post-Emergence EBITDA Estimate 6.1
Filing — Type Chapter 11 (Prepackaged)
Section 363 Asset Sale by Debtor No Petition Date Versus Emergence Date
Postconfirmation Liquidating Trust No Total Debt 279 139
Resolution Emerged/Reorganized (Private) Consolidated Leverage (x) 6.6 5.7

Fairway experienced competitive pressures in multiple market segments as competitors expanded aggressively in marketing a range of organic and natural foods,
prepared foods and quality specialty grocery items. The density of the company’s New York City metropolitan area market exacerbated the competitive pressures as
customers could walk to competitors. For example, a competitor (Whole Foods) opened on the Upper East Side within a half mile of a Fairway, and Fairway’s same-store
sales for its store there decreased by 6%. Profit margins were slim and a step-down in the leverage covenant to 5.75x on April 1, 2016 limited flexibility. Due to high
secured debt leverage, Fairway was unable to make sufficient capital improvements and fund marketing efforts to effectively compete against competitors with greater
financial resources, including mass merchandizers, warehouse stores and other organic/specialty grocery chains.
Starting in early 2015, the company tried to raise additional capital or sell the business with the assistance of investment bankers. However, no acceptable offers were
received, and the company elected to strategically file a Chapter 11 plan to maximize the value of the business. The filing was made after a restructuring support
agreement was reached with secured lenders holding more than 70% of secured loans.

Fundamental Going Concern Enterprise Valuation
Fairway’s third-party financial advisor estimated a reorganization value of $135 million–$165 million, a debt balance of $139 million and cash of $42 million.
The valuation was based on a review of three years of historical financial information, the company’s financial projections, the market value of peers and other industry
data. The advisor assumed forecasts for sales and EBITDA were achieved. The forecast included projected EBITDA as follows:
($ Mil., Fiscal Year) 2017 2018 2019
EBITDA 25.5 24.4 28.5

The Chapter 7 liquidation alternative valuation estimated a hypothetical liquidation value in the range of $93.5 million–$123.5 million. The analysis assumes the case was
converted to a Chapter 7 liquidation on June 30, 2016 and all of the assets are liquidated by a trustee. A reduction of 25%–45% was made to the $150 million going-
concern value in order to estimate a liquidation value that reflects the forced sale nature of Chapter 7 liquidation and that multiple sales transactions would generate
significant discounts compared to the value generated by a combined sale of all of Fairway Stores. Further, the company believed that liquidating assets through a series
of going-out-of-business sales would only further reduce the recovery estimates contained in this liquidation analysis.
a
Nondebtor affiliate included Fairway Lake Grove LLC. bSource 10-K for FYE March 29, 2015 and is adjusted EBITDA per company’s disclosure.
FYE – Fiscal year end.
Source, unless otherwise noted: Disclosure statement for the joint prepackaged plan of reorganization dated May 2, 2016 and second amended plan of reorganization
dated June 8, 2016.

September 28, 2016
Leveraged Finance
Fairway Group Holdings Corp. (Continued)

DIP and Priority $85.6 Million DIP Facility 45 100.0 RR1 — 45 — — 3 —
Secured Revolver and Term Loan Facility 279 45.0 RR4 — 45 35 — 39 —
Unsecured Non-Priority Trade Claims 5–7 100.0 RR1 5–7 — — — — —
Intercompany Intercompany N.A. 0–100 RR6 — — — — — —
Estimated Claims 334 — Recoveries 5–7 90 35 0 42 0
a

DIP and Priority $85.6 Million DIP Facility • DIP borrowings assumed by Fitch to be $45 million were converted to a first-out term loan.
• Facility consisted of a $55 million new-money term loan and a $30.6 million letter of credit facility.
• DIP was provided by certain prepetition lenders that were party to the restructuring support agreement and
agreed to the priming of their lien.
• Interest rate of LIBOR plus 8% with 1% floor on term loan tranche.
• Lenders received 10% of the new common stock.
Secured Revolver and Term Loan Facility • Distributions consisted of 90% of the new common stock, the last-out exit term loan and the subordinated
holding company (HoldCo) loan.
• The subordinated HoldCo loan was made by prepetition lenders and contributed as equity from the holding
company to the reorganized company for distribution to the prepetition lenders.
• Excluding the HoldCo loan, the recovery rate was 33%.
Unsecured Non-Priority Trade Claims • Paid in full in cash.
• Claims were held by third-party providers of goods and services.
• Excludes trade claims that were entitled to statutory priority under section 503(b)(9) that totaled
$16 million–$20 million and were also paid in full.
Intercompany Intercompany • Adjusted, reinstated or discharged as deemed appropriate by the company. Such treatment had no impact
on the distributions to creditors that were not affiliated with the company.
Equity Equity Interests • All existing interests were cancelled on the plan effective date.
• $0 recovery.
a
$39 million subordinated holding company loan was made by prepetition lenders to the HoldCo, contributed to the reorganized company as equity and distributed to
holders of the prepetition secured facility. Exit debt excludes letter of credit. RR – Recovery Rating. DIP – Debtor in possession. N.A. – Not available.
Source, unless otherwise noted: Disclosure statement for the joint prepackaged plan of reorganization dated May 2, 2016 and second amended plan of reorganization
dated June 8, 2016.

September 28, 2016
Leveraged Finance
Fairway Group Holdings Corp. (Continued)
Cash on Filing Date Not available.
Prepetition Bank Facility Commitments $40 million revolving credit facility and $269.8 million remaining debt under a $275 million (original) term loan.
Prepetition Bank Facility Borrowings on Filing Date $9.2 million of borrowings and $30.6 million of letters of credit under the $40 million revolver, plus the
$269.8 million term loan debt.
Was the DIP a New Money Facility or Roll Up of a The DIP term loan tranche was new money, and the prepetition letter of credit facility was converted into a DIP
Prepetition Facility? letter of credit facility and then an exit letter of credit facility.
Other Notable Issues This was purely a balance sheet restructuring that impaired only the senior secured lenders. Stores remained
open.
Executory Contracts Store leases and employee agreements were assumed and unaltered. Collective bargaining agreements were
treated as executory contracts that were assumed under the plan.
Deficiency Claims No
Contingent Claims and/or Contingent Recoveries Disputed claims are contingent claims and were to be settled one by one via settlement, satisfaction, claim
objections, etc.
Pension Claims/Motions All employee benefit plans and collective bargaining agreements were continued and honored with no changes.
Recipient and Comments All trade vendors, landlords, vendors and employees were paid in full in the ordinary course of business.

Source: Fitch Ratings, company disclosure statement dated May 2, 2016 and second amended plan of reorganization dated June 8, 2016.

September 28, 2016
Leveraged Finance
Finlay Enterprises, Inc.


Subsector Jewelry Retailer Key Driver Untenable Capital Structure
Prepetition Ticker Symbol FNLY
a
Emergence Parent Company Name/Ticker Did Not Emerge Financial Profile
Prepetition EBITDAb 1/31/09 (55)
Bankruptcy Summary Post-Emergence EBITDA Forecast N.A. Did Not Emerge
Resolution Liquidation (Under Chapter 11) Total Debt 269 0
Consolidated Leverage (x) (4.9) N.A.

Finlay Enterprises sales declined because host department stores for leased space in Finlay’s department store business began closing stores as a result of department
store mergers and closure of underperforming locations in the years leading up to the bankruptcy. The company was also challenged by the credit crisis and weak
consumer spending.
In terms of store closings, 194 Finlay’s leased stores closed due to Macy’s 2005 merger with May Department Stores because Finlay’s departments were either divested
or phased into a Macy’s division. Following the merger, Macy’s announced further corporate restructuring initiatives, which resulted in the loss of 94 departments at the
end of 2008. These two Macy’s initiatives alone reduced Finlay’s annual revenue by over $350.5 million. Belk Department stores terminated licensing agreements that
resulted in the closure of 75 Finlay’s departments in May 2006. The Gottschalk’s store chain filed bankruptcy and liquidated, which resulted in the closure of 16 more
Finlay’s departments in 2009.
Vendor terms tightened as a result of downgrades of Finlay’s credit ratings and bankruptcies of unrelated jewelry retailers. High unemployment, foreclosures, and the
credit crisis contributed to a weak retail sector environment.
The prepetition asset-based lenders reduced the revolving facility availability in January 2009 and again in February 2009. In an effort to improve results, the company
announced plans to exit the leased store business and consolidate their stand-alone locations in February 2009, and in June 2009 initiated a formal process to sell all
assets as a going concern or liquidation. On June 1, 2009, the semi-annual interest payment of $1.7 million was due to the holders of the senior notes and was not paid.

Liquidation Value Estimated by Sum of Payments to Secured Creditors and Claims
Fitch estimates a liquidation value of $165 million based on the sum of estimated payments to creditors and claims. The source of cash for these payments was the
proceeds from the liquidation of the company. The largest contribution to the liquidation proceeds was from the Gordon Brothers merchandise liquidation sale of the
stand-alone stores. The sale was conducted under an agency agreement that was the result of an auction bid process. Gordon Brothers guaranteed that the proceeds of
the merchandise inventory liquidation sale at 49 stand-alone specialty store locations and two distribution centers would be a minimum of 85.75% of the cost value of the
merchandise, with a fifty-fifty sharing mechanism for proceeds above the minimum guarantee threshold plus agent fees and costs. The guarantee percentage was based
on a merchandise cost amount in the range of $117 million and $120 million, and the guarantee percentage was to be adjusted if the cost value was higher or lower than
this cost range. The agent’s base fee was 6.75% of the cost value of the merchandise, and the additional fee was 2.125% of the merchandise. Additional going out of
business sales occurred at the leased department store locations (these sales started in March 2009) and at stand-alone locations between the petition date of Aug. 5,
2009, and the start of the agented stand-alone liquidation sale that started in late September 2009.
Chapter 7 Liquidation Value Alternative

Under a Chapter 7 liquidation, recoveries of third-lien claims would be nominally lower than under a Chapter 11 plan due to higher professional fees in a Chapter 7
conversion. Unsecured claims would have had $0 recoveries in a Chapter 7 conversion because holders would not have received their pro rata share of the $7 million
settlement payment from the third-lien holders.
a
Assets as of Jan. 31, 2009, source company 10-K. bSource prepetition EBITDA company 10-K for fiscal year ended Jan. 31, 2009. DIP – Debtor in possession.
N.A. – Not applicable.
Source, unless otherwise noted: Disclosure statement for the modified plan of liquidation dated May 18, 2010.

September 28, 2016
Leveraged Finance
Finlay Enterprises, Inc. (Continued)

DIP or Other There Was No DIP Facility 0 Not Applicable — — — — —
Administrative
Asset Based Lending
Secured Revolving Credit Facility 0 100.0 RR1 46 — — — — —
Second-Lien Notes Due
Secured June 2012 0 100.0 RR1 22.8 — — — — —
Third-Lien Claims,
Including Notes Due June
2012 and Third-Lien
Secured Vendor Claims 194 44.7 RR4 86.6 — — — — —
Secured Other Secured Claims 100.0 RR1 — — — — — —
General Unsecured
Claims, Including 8.375%
Unsecured Senior Unsecured Notes 144 4.9 RR6 7 — — — — —
Equity Equity Interests — 0 RR6 — — — — — —
Estimated Claims 338 — Recoveries 162.4 0 0 0 0 0
New Borrowings at
Emergence 0 — — — — — — — —

DIP or Other There Was No DIP Facility • The company used cash collateral during the bankruptcy period and was required to make payments on the asset-
Administrative based facility then to the second-lien notes with excess cash collateral from the liquidation sales.
Secured Asset-Based Lending • Petition date borrowings of $46 million plus accrued interest were paid in full prior to the disclosure statement date using
Revolving Credit Facility proceeds from the going-out-of-business liquidation sales.
Secured Second-Lien Notes Due • Petition date borrowings of $22.8 million and accrued interest were paid in full prior to the disclosure statement date
June 2012 using proceeds from the going-out-of-business liquidation sales.
• The second-lien notes accrued interest on a pay in kind (PIK) basis from Nov. 26, 2008 to Dec. 1, 2010, and then were
to become cash pay at 11.375%.
Secured Third-Lien Claims, • There were $159.4 million of third-lien notes that accrued interest on a PIK basis from June 1, 2008 to Dec. 1, 2010.
Including Notes Due June The PIK interest was to become payable on the maturity date.
2012 and Third-Lien • The third-lien notes were issued in exchange for unsecured notes and reduced the amount of unsecured notes
Vendor Claims outstanding.
• Third-lien claims also included secured vendor claims of $17.48 million as of the petition date.
• The vendors party to the secured vendor agreement agreed to a deferred payment schedule in exchange for becoming
secured on a pari passu basis with the third-lien notes.
Secured Other Secured Claims • Unimpaired and deemed to accept the plan.
Unsecured General Unsecured • Included 8.375% senior unsecured notes due 2012 with a petition date balance of $40.6 million (original balance of
Claims, Including 8.375% $200 million reduced through $159.4 million of exchanges into second- and third-lien notes).
Senior Unsecured Notes • Received recoveries from $7 million cash settlement with third-lien claimholders that related to disputes over
prepetition debt exchanges.
Equity Equity Interests • Received $0 recovery and deemed to have rejected the plan of reorganization.
Source, unless otherwise noted: Disclosure statement for the modified plan of liquidation dated May 18, 2010.

September 28, 2016
Leveraged Finance
Finlay Enterprises, Inc. (Continued)

Cash on Filing Date $5.16 million as of Aug. 6, 2009, as per monthly operating report for period Aug. 5–Sept. 30, 2009.
Prepetition Bank Facility Commitments Original commitment of ABL was $550 million revolving credit facility with $75 million letter of credit sublimit.
Commitment was reduced to $266.6 million from $550 million in February 2009. Borrowings were limited by a
borrowing base.
Prepetition Bank Facility Borrowings on Filing Date $37.5 million ABL borrowings and $8.5 million of letters of credit.
Was the DIP a New Money Facility or Roll Up of a There was no DIP. The cash collateral order required the company to use excess cash collateral to pay down
Prepetition Facility? the prepetition ABL and then the second-lien notes. During the bankruptcy, the company used the proceeds of
the Gordon Brothers transaction for the sale of all assets to satisfy these obligations in full.
Executory Contracts All real property leases were rejected except the leases that were otherwise disposed of in connection with the
sale of lease designation rights to bidders at three auctions during the bankruptcy.
Deficiency Claims Yes, third-lien claims were undersecured, and holders received distributions as general unsecured rates for the
deficiency portion. Third-lien holders also reached a settlement with unsecured claimants that paid $7 million
cash to unsecured holders in exchange for ending disputes over prepetition debt exchanges.
Contingent Claims Disputed claims.
Intercompany Claims No distributions were made to intercompany claims.
Pension Claims/Motions None.
If Yes, Recipient Class Other secured.
Recipient General unsecured claims, including senior notes.

Source: Fitch Ratings, amended disclosure statement for the modified plan of reorganization dated May 18, 2010.

September 28, 2016
Leveraged Finance
Goody’s, LLC

Subsector Family Clothing Store Key Driver Untenable Capital Structure
Privately Held,
Bankruptcy Summary Prepetition EBITDA — Undisclosed
Did All Entities in the Group File? Yes Post-Emergence EBITDA Forecast — N.A., Liquidated
a
Plan Proposed by Debtor Enterprise Value (EV) Range (or Asset Value Range)
Court District Delaware Low 122
Filing — Type Chapter 11 Midpoint EV/Post-Emergence EBITDA Estimate N.A.
Yes — Sale of Substantially All
Section 363 Asset Sale by Debtor Assets (as Liquidation)
Voluntary or Involuntary Filing Voluntary Petition Date Versus Emergence Date
Consolidated Leverage (x) N.A. N.A.

Goody’s, LLC’s preceding company, Goody’s Family Clothing Inc., filed its first bankruptcy case in June 2008 due to years of operational losses and emerged four
months later through reorganization (as a limited liability company) after closing 74 stores and restructuring its debt. However, the company’s sales trend turned much
weaker than expected during the critical holiday season in 2008 due to the deep recession and significant slowdown in consumer discretionary spending and as a result
filed for its second bankruptcy and liquidated all its remaining 282 stores. The company’s same store sales in October–December 2008 decreased by mid- to high-teens
percentage year over year. The significantly weaker-than-expected sales performance and resulting increased markdowns further impaired profitability and had negative
impact on liquidity.
The tightening of credit markets also exacerbated the company’s liquidity position. The company’s trade vendors and factors did not provide sufficient terms and
effectively stopped shipping on any terms after the 2008 Thanksgiving holiday weekend. In addition, the advertising vendors required unplanned prepayment of the
holiday advertising events, resulting in a $15 million drain in liquidity. Following failed restructuring efforts, including finding potential buyer/investor and seeking an out-
of-court solution to remain as a going concern, Goody’s decided the best course of action was an orderly liquidation and selected its liquidator before filing for Chapter
11 bankruptcy on Jan. 13, 2009.

Fitch Estimate of Enterprise Value Based on Liquidation Proceeds
Goody’s was liquidated in its second bankruptcy. Prior to its bankruptcy filing, Goody’s selected a joint venture of Hilco Merchant Resources LLC and Gordon Brothers
Retail Partners LLC to run going-out-of-business (GOB) sales at its stores. Under the agency agreement, the liquidator guaranteed a recovery of 77.7% of inventory
cost value.
The enterprise value estimate of $122 million reflects $119 million cash proceeds from the GOB liquidation sale plus $3 million from the sale of intellectual property
assets. The GOB sale was concluded by the disclosure statement publication date.

The liquidation analysis provided in the disclosure statement entailed payment of trustee fees and other costs for a Chapter 7 filing and would have reduced recoveries
compared to Chapter 11, assuming the liquidation proceeds and other outstanding claims were equal.
a
Fitch estimate based on liquidation proceeds through the disclosure statement date. DIP – Debtor in possession. N.A. – Not applicable.
Source, unless otherwise noted: First amended disclosure statement dated Dec. 23, 2009, monthly operating reports as of January 2009 and Nov. 4, 2010.

September 28, 2016
Leveraged Finance
Goody’s, LLC (Continued)

($ Mil., Except Where Noted) Equivalent Form of Distribution
Allowed Projected RR Secured Unsecured Subordinated New Options/
DIP or Other
Administrative Administrative and Priority Claims 6.8 100.0 RR1 45 — — — — —
Secured Claims, Including Secured
Credit Facility First-, Second-, Third-
Secured and Fourth-Lien Tranches 0.5 100.0 RR1 61 — — — — —
Unsecured General Unsecured Claims 114.4 0.5 RR6 0.6 — — — — —
Equity Equity Interests N.A. 0 RR6 — — — — — —
Estimated Claims 121.8 — Recoveries 106.6 0 0 0 0 0

DIP or Other Administrative and Priority Claims • Payments during the bankruptcy period included a liquidation agent fee of $34.5 million and professional
Administrative fees of
$6.5 million and other payments.
• Paid in full.
• The liquidation agent fee was paid prior to the disclosure statement date.
Secured Secured Claims, Including Secured • Paid in full with proceeds from liquidation sales prior to the disclosure statement date estimate of allowed
Credit Facility First-, Second-, Third- claims.
and Fourth-Lien Tranches • Prepetition secured debt consisted of a) $0.55 million outstanding under a $175 million revolving credit
facility and $15 million letters of secured by first-lien interests in all assets; b) $10 million tranche B term
loan, secured by second-lien interests in the company assets; and c) $20 million tranche C term loan and
$15 million tranche D term loan, plus accrued interest and fees, secured by third-lien and fourth-lien
interests in the company assets, respectively.
Unsecured General Unsecured Claims • Prepetition unsecured claims were $145 million.
• Includes $3.4 million of WARN Act union settlement claims that were unsecured and excludes $1 million of
priority WARN Act union settlement claims that were paid in full
Equity Equity Interests • Holders received no distributions and were deemed to have rejected the plan.
Source, unless otherwise noted: First amended disclosure statement dated Dec. 23, 2009, monthly operating reports as of January 2009 and Nov. 4, 2010.

September 28, 2016
Leveraged Finance
Goody’s, LLC (Continued)

a
Cash on Filing Date $2.75 million.
Prepetition Bank Facility Commitments Prepetition credit agreement included a $175 million ABL revolving credit facility and
$15 million letters of credit with General Electric Commercial Capital, secured by first-lien interests in all the
company’s assets.
Prepetition Bank Facility Borrowings on Filing Date $0.55 million outstanding under the $175 million prepetition ABL revolver and $15 million issued under the
prepetition letter of credit as well as tranche B ($10 million), tranche C ($20 million), and tranche D ($15 million)
term loans
Was the DIP a New Money Facility or Roll Up of a There was no DIP facility.
Executory Contracts In addition to rejecting certain equipment leases and contracts, the company rejected more than 275
nonresidential real estate leases.
Certain Worker Adjustment and Retaining Notification Act (WARN Act) union and class claims were settled. The
claims from the employees terminated after the petition date were granted administrative priority status and paid
in full, while the claims from the employees terminated without cause within 30 days of the petition date were
treated as a general unsecured claim and received a nominal 0.1% recovery based on the disclosure statement
estimates.
Deficiency Claims None; secured lenders were paid in full.
Contingent Claims A reserve was established for disputed claims.
Pension Claims/Motions Not applicable.
If Yes, Recipient Class Secured credit facility tranches.
Recipient Employee union wage claims per WARN Act settlement recovered more than other unsecured creditors as a
portion of the claims were elevated to priority claims in the settlement.
a
Source of cash on filing date is monthly operating report dated Nov. 4, 2010. ABL – Asset-based loan. DIP – Debtor in possession.
Source: Fitch Ratings, first amended disclosure statement dated Dec. 23, 2009, monthly operating reports as of January 2009 and Nov. 4, 2010.

September 28, 2016
Leveraged Finance
Gottschalks, Inc.
($ Mil., Except Where Noted

Subsector Department Stores Key Driver Untenable Capital Structure
Prepetition Ticker Symbol GOTT
Financial Profile
Emergence Parent Company Name/Ticker N.A.
a
Bankruptcy Summary Post-Emergence EBITDA Forecast — N.A., Liquidation
Enterprise Value (EV) Range (or Asset Value Range)
Low 110
Substantive Consolidation No Equity Value Range
Effective Date 3/1/11 Midpoint EV/Post-Emergence EBITDA Estimate N.A.
Assets (as Liquidation) Petition Dateb Emergence Date
Voluntary or Involuntary Filing Voluntary Total Debt 131 0
Postconfirmation Liquidating Trust Yes Consolidated Leverage (x) 26.2 N.A.
Resolution Liquidation (Under Chapter 11) Debt Shed in Bankruptcy — 131

Gottschalks incurred significant losses in the two years prior to its Chapter 11 filing as a result of decreasing sales in the difficult economic and credit environment. The
housing downturn and foreclosure rates in California, which accounted for 80% of sales volume, were particularly severe. The weak housing market reduced
discretionary spending. The operating losses weakened the company’s liquidity position. Cash from operations and borrowing availability became insufficient by late
2008 to meet estimated cash requirements unless additional financing could be obtained. Therefore, the company pursued alternative financing opportunities and other
sources of funding. On Nov. 20, 2008, the company entered into an investment agreement with Everbright Development Overseas Securities Ltd. (Everbright) for up to
$30 million of new equity in Gottschalks. However, shortly after the Everbright equity agreement was signed, the independent appraiser (who determined the $200
million revolver available borrowing base) lowered the estimated value of the inventories. The prepetition asset based lender then reduced revolver availability and
Everbright was no longer willing to invest in new shares. The company was unable to raise new equity from other sources, leading to the filing of Chapter 11.

Chapter 11 Going-Out-of-Buiness-Sale Proceeds Plus Value of Remaining Assets Established the Company Value
Gottschalks was liquidated in bankruptcy. Recovery distributions for creditors were made with the cash proceeds from the §363 asset sales in Chapter 11. The
bankruptcy court approved the sale of all assets in an auction process. The company notified the court that it would not participate in the auction. Two liquidation agent
bidders, Great American Joint Venture and Gordon Brothers Joint Venture, bid in the auction to liquidate the inventory, furniture, and fixtures in a “going out of business
sale.” The auction occurred on March 31, 2009. The Great American bid of $90 million–$96 million (depending upon certain factors) for the inventory, furniture, and
fixture assets was the winning bid. The debtor estimated that assets excluded from the auction such as accounts receivable, cash, real estate, and other assets had a
remaining value of $20 million–$26 million. The sum of the auction proceeds and the range of value for the other assets resulted in a total estimated company value in
the range of $110 million–$122 million.
Chapter 7 Liquidation Alternative

The debtor believes more cash would be realized in a Chapter 11 liquidation because of the disposition expenses and trustee fees associated with a Chapter 7
liquidation. There was no Chapter 7 liquidation value included in the disclosure statement. However, the debtor stated the maximum recovery in a Chapter 7 would be
“substantially less” as a result of costs associated with Chapter 7.
a
Source of prepetition EBITDA is 10-K dated Feb. 2, 2008. bSource of petition date debt is monthly operating statement for period ended Jan. 31, 2009.
Source, unless otherwise noted: Company modified plan of liquidation dated Feb. 2, 2011.

September 28, 2016
Leveraged Finance
Gottschalks, Inc. (Continued)

DIP $125 Million GECC DIP 0 100.0 RR1 N.A. — — — — —
Facility
Secured $200 Million GECC Senior 0 100.0 RR1 73 — — — — —
Loan Borrowing Base Loan
Facility
Unsecured General Unsecured Claims 75–105 3.8–13.3 RR6 Approx. — — — — —
4–10
Subordinated Note Payable to Affiliate 0 0 RR6 — — — — — —
Equity Equity Claims 0 0 — — — — — — —
a
Estimated Claims 75–105 — Recoveries 77–83 0 0 0 0 0
New Borrowings at
Emergence 0 — — — — — — — —

DIP $125 Million GECC DIP • Borrowings under the DIP facility were paid in full in cash prior to the disclosure statement date with proceeds from the
Facility sale of the company’s inventory assets and certain real estate assets.
• The amount of DIP borrowings was not disclosed.
• The DIP had a superpriority administrative status.
Secured $200 Million GECC Senior • Petition date borrowings of $73 million, plus letters of credit of $6.5 million, were repaid in full in cash with proceeds of
Loan Borrowing Base Loan borrowings under the superpriority GECC DIP facility.
Facility • The prepetition facility was secured by substantially all assets.
Unsecured General Unsecured Claims • General unsecured claims were significantly impaired.
• After payment of administrative and priority claims, remaining asset value of roughly $4 million–$10 million was
estimated by the debtor that would be available for partial satisfaction of these claims.
Subordinated Note Payable to Affiliate • The subordinated note payable claim of Spanish affiliate, El Corte Ingles, was not allowed, and the noteholder
received $0 recovery.
Equity Equity Claims • Received $0 distributions.
a
Recoveries exclude the value of assets remaining after the §363 sale and cash payments to DIP lenders made prior to the disclosure statement date.
DIP – Debtor in possession. GECC – General Electric Capital Corp. (a lender). RR – Recovery Rating. N.A. – Not available.
Source, unless otherwise noted: Company modified plan of liquidation dated Feb. 2, 2011.

September 28, 2016
Leveraged Finance
Gottschalks, Inc. (Continued)

a
Cash on Filing Date $3.8 million.
Prepetition Bank Facility Commitments $200 million revolving credit facility due 2012 with availability subject to a borrowing base.
Prepetition Bank Facility Borrowings on Filing Date $73 million borrowings plus 6.5 letters of credit.
Was the DIP a New Money Facility or Roll Up of a The DIP facility was a roll up of the prepetition facility borrowings. Proceeds from asset sales repaid the DIP
Prepetition Facility? lenders in full.
Executory Contracts As of Oct. 31, 2009, the debtor had assumed 12 leases (11 of which were assigned), terminated one lease, and
rejected 50 leases and two subleases. The amount of related claims was not disclosed. Claims were ranked as
general unsecured claims.
Deficiency Claims There were no allowed intercompany claims.
Contingent Claims Not disclosed
Intercompany Claims The subordinated intercompany note received $0 recovery.
Pension Claims/Motions The company had a 401(k) plan only.
a
Source of cash on filing date is monthly operating report for period Jan. 14–31, 2009. DIP – Debtor in possession.
Source, unless otherwise noted: Fitch Ratings, company modified plan of liquidation dated Feb. 2, 2011.

September 28, 2016
Leveraged Finance
The Great Atlantic and Pacific Tea Company, Inc.


Fitch Industry Classification Supermarkets and Drug Stores Key Driver Resolve Legacy Liabilities
Subsector Supermarkets Key Driver Untenable Capital Structure
Prepetition Ticker Symbol GAP
Emergence Parent Company Name/ Great Atlantic and Pacific Tea Co./ Financial Profile
Ticker Not Publicly Traded
b
Bankruptcy Summary Post-Emergence EBITDA Forecast 12/31/13 185
Did All Entities in the Group File?a No
Low 1,000
Plan Proposed by Debtor
High 1,000
Court District New York — Southern
Midpoint EV (Value) 1,000
Equity Value Range c
Petition Date 12/12/10
Low 80
High 80
Midpoint EV/Post-Emergence EBITDA Estimate (x) 5.4
Section 363 Asset Sale by Debtor Yes — Partial Sale of Assets Petition Date Versus Emergence Date
Postconfirmation Liquidating Trust No
Total Debt 1,000 901
Debt Shed in Bankruptcy (%) — 9.9

The significant economic downturn in the years prior to the bankruptcy of The Great Atlantic and Pacific Tea Company (A&P) created a challenging operating
environment. A&P was faced with and economic decline, reduced customer spending, narrow margins, and intense competition. Additionally, aggressive competition
from nontraditional food retailers, including warehouse clubs, mass merchandisers, and discount retailers also challenged operations. Prior to the petition date, A&P’s
cost structure reflected an unsustainable level of legacy obligations that placed it at a competitive disadvantage to traditional and nontraditional peers. The debtors were
also parties to a number of materially unfavorable supply and services contracts. The unfavorable contracts included leases on dark stores, expensive supply and
logistics agreements, and employee pension and healthcare obligations. The debtors ultimately determined that the combination of falling revenues, a leveraged
balance sheet, legacy costs, and unfavorable supply relationships could not be fixed outside of Chapter 11.

Fitch Enterprise Value Estimate Based on Total of Plan Distributions
Fitch Ratings estimates a rough going-concern enterprise value of $1,000 million. The estimate is based on the approximate sum of distributions under the plan.
Distributions included administrative and professional payments of approximately $175 million, capital lease reinstatements of $101 million, DIP claim payments of
$355 million, second-lien note claim payments of approximately $308 million and various unsecured claim and other payments. The plan distributions were partially
funded by the $490 million new investment, which are summarized below. The new investment was the cornerstone of the plan of reorganization. The disclosure
statement did not include the typical third-party enterprise valuation analysis but did indicate the advisor believed a plan based on the $490 million new investment
would maximize value.
New Investment to Fund the Plan

Investors provided a new money commitment of $490 million that consisted of (i) $210 million of privately placed new second-lien notes, (ii) $210 million amount of
convertible third-lien notes, and (iii) an $80 million of new equity. The proceeds were used to make distributions, including paying certain secured creditors in full in cash,
and provided a cash pool of $40 million, less the amount distributed pursuant to the substantive consolidation settlement, for distributions to general unsecured
creditors. Yucaipa Companies LLC, Mount Kellett Capital Management LP and investment funds managed by Goldman Sachs Asset Management were the investors
that provided the new money commitment.
a
Filing excluded foreign subsidiaries. bEBITDA excludes cash flow from planned initiatives. cEquity based on book value in management forecast.
Source, unless otherwise noted: Revised disclosure statement dated Dec.19, 2011.
Note: This is an update of a case study published April 16, 2013. The Great Atlantic and Pacific Tea Co, filed a subsequent bankruptcy in 2015 and is currently
liquidating the full chain.

September 28, 2016
Leveraged Finance
The Great Atlantic and Pacific Tea Company, Inc. (Continued)

Enterprise Valuation Estimate Summary (Continued)
• The liquidation alternative valuation was based on discounts to the asset book value of $2.2 billion. The liquidation alternative was anticipated to have resulted in
gross liquidation proceeds in the range of $1.096 billion to $1,371 billion and was assumed to be completed in a 12-month period starting March 2012.
• The asset book value and discounts applied to book value used in the analysis (low and high value) included:
o Cash of $175 million at 100%
o Accounts receivable of $167 million at 81%–89% of book value
o Inventories of $399 million at 90%–100%
o Property, plant and equipment of $1,040 million at 32%–51%
o Goodwill, intangibles and joint ventures of $233 million at 10%
o Wind-down and operating costs during the liquidation period were estimated to be $202 million to $217 million.
o Administrative and other costs in a liquidation were estimated to have been $698 million to $724 million and included nearly $300 million in damages from
previously assumed leases.
• The liquidation alternative would have resulted in $0 recoveries for second-lien lenders, compared to full recovery under the going concern new investment
based plan.
Source: Revised disclosure statement dated Dec. 19, 2011.
Note: This is an update of a case study published April 16, 2013. The Great Atlantic and Pacific Tea Co, filed a subsequent bankruptcy in 2015 and is currently
liquidating the full chain.

September 28, 2016
Leveraged Finance
The Great Atlantic and Pacific Tea Company, Inc. (Continued)

DIP or Other DIP Claims 355 100.0 RR1 355 — — — — —
Administrative
Secured Capital Leases 101 100.0 RR1 — 101 — — — —
Secured 11.375% Second-Lien Notes 308–311 100.0 RR1 308 — — — — —
Due 2015
Unsecured Notes and Bonds 648 2.1–2.7 RR6 13.6–17.5 — — — — —
Unsecured Trade Claims 40–50 2.1–2.7 RR6 0.8–1.4 — — — — —
Unsecured Guaranteed Landlord Claims 10–30 3.0–3.9 RR6 0.3–1.2 — — — — —
Unsecured Pension Withdrawal Claims 150–310 4.9–6.3 RR6 7.5–20 — — — — —
Unsecured Union Claims N.A. N.A. — — — — — — —
Unsecured General Unsecured 440–520 2.2–2.7 RR6 9.7–14 — — — — —
Intercompany Intercompany N.A. 0–100 — — — — — — —
Equity Convertible Preferred 175 0 RR6 — — — — — —
Equity Equity Interests 9 0 RR6 — — — — — —
Estimated Claims 2,373 — Recoveries 705 101 0 0 0 0
New Borrowings at
Emergencea 800 — — — — — — — —

DIP or Other DIP Claims • Borrowings of $135 million under the prepetition first-lien facility were rolled into the DIP term loan facility.
Administrative • Included $350 million new money term loan and a $450 million revolver with a $250 million letter of credit sublimit.
• Secured superpriority priming lien.
Secured Capital Leases • The company’s forecast indicated capital leases of $101 million prior to emergence and after reorganization.
Secured 11.375% Second-Lien Notes • The principal amount of the claim was approximately $260 million.
Due 2015 • Secured by a second lien on substantially all assets including receivables and inventory.
• Cash distribution assumes the second-lien class of claimants voted to accept the plan.
Unsecured Notes and Bonds • Claims included $165 million of 5.125% convertible notes, $12.8 million of 9.125% senior notes, $265 million of
6.75% convertible notes, and $202 million of quarterly interest bond claims.
• Claims paid using proceeds of $40 million unsecured cash pool.
Unsecured Trade Claims • Paid with proceeds from unsecured trade claim cash pool (which was separate from the cash pool for the note and
bond claims).
• The “Trade Claims Cash Pool” is up to $10 million, from which discretionary cash distributions may be made to
holders of allowed trade claims who enter into trade agreements acceptable to the debtors and investors and DIP
lenders if approved by the bankruptcy court.
Unsecured Guaranteed Landlord Claims • Holders of allowed guaranteed landlord claims had recourse against both an operating debtor and A&P through a
guarantee.
• Received 1% more percentage recovery than general unsecured claim holders.
Unsecured Pension Withdrawal Claims • Paid pro rata share of unsecured creditor cash pool; or If holder voted in favor of the plan, a cash distribution from
the unsecured creditor cash pool such that the applicable holder’s total percentage recovery for its claim was equal
to the product of (x) what such holder would receive under the above clause for such claim multiplied by (y) 2.35.
• Holders reached a settlement with the debtors that provided a slightly higher recovery than other unsecured claims
as holders may have held claims against multiple debtors.
Unsecured Union Claims • Distribution percentage based on settlement agreement.
• In general, the settlement provide the unions with some administrative claim distributions in exchange for modified
collective bargaining agreements that altered certain provisions relating to wages, benefits, and working conditions.
Unsecured General Unsecured • Paid pro rata share of unsecured creditor cash pool.
Intercompany Intercompany • Received no distributions under the plan but may have been reinstated at the company’s option.
Equity Convertible Preferred • Received no distributions under the plan.
• Deemed to have rejected the plan of organization.
• Affiliates of Yucaipa, one of the new money investors, controlled the preferred stock.
Equity Equity Interests • Received no distributions under the plan.
• Deemed to have rejected the plan of organization.
a
New borrowings at emergence in the management forecast included a $350 million term loan, $199.5 million second-lien note and $250 million third-lien note.
N.A. – Not available. RR – Recovery Rating. DIP – Debtor in possession.
Source, unless otherwise noted: Revised disclosure statement dated Dec. 19, 2011.

September 28, 2016
Leveraged Finance
Great Atlantic and Pacific Tea Company, Inc. (Continued)

Cash on Filing Date Not available. $92 million cash as of Dec. 1, 2010, as per monthly operating report for period ended
Dec. 31, 2010.
Prepetition Bank Facility Commitments $620 million first-lien facility, including a $520 million ABL revolver and a term loan.
Prepetition Bank Facility Borrowings on Filing Date $38 million borrowed under the first-lien revolver (facility also had $192 million of letters of credit outstanding
that reduced borrowing availability under the revolver) and $98 million of first-lien term loans.
Was the DIP a New Money Facility or Roll Up of a The $800 million DIP was partially new money and partially a roll up. The $350 million DIP term loan tranche
Prepetition Facility? was a roll up of the prepetition secured credit facility borrowings and letters of credit.
Executory Contracts 73 dark store leases as well as 25 underperforming leases and 26 subleases were rejected. As of the
disclosure statement publication date, the debtors had executed approximately 32 store closing sales,
generating approximately $24 million in annual EBITDA improvement. In addition, a significant supply and
logistics contract (the C&S Agreement) was rejected and a replacement contract was signed, and 32 collective
bargaining agreements were modified.
Deficiency Claims No secured claims were paid in full.
Contingent Claims Grocery Haulers, Inc. (GHI) has filed claims against A&P and Pathmark Stores, Inc. in the amount of
approximately $220.9 million, of which GHI contends $107.9 million is an administrative claim. The debtors
disagree with the amount of GHI’s asserted general unsecured claim and believe that GHI does not have any
administrative claim. The debtors reserve their rights to contest GHI’s proofs of claim.
Intercompany Claims Received no distributions under the plan. The claims were either extinguished or reinstated at the debtor's
option.
Pension Claims/Motions The debtors were party to single employer and multi-employer pension plans. For plans that the debtor
withdrew from prior to the petition date, there were plan withdrawal claims that were paid distributions at a
slightly higher recovery rate than other general unsecured claims. Many plans were continued.
Recipient Guaranteed landlord claims and pension withdrawal claims as per the substantive consolidation settlement.

Source: Fitch Ratings, company disclosure statement dated Dec. 19, 2011.

September 28, 2016
Leveraged Finance
Harry & David Holdings, Inc.


Subsector Specialty Retailer of Fruit and Key Driver Untenable Capital Structure
Other Foods
Emergence Parent Company Name/ Harry & David/
Ticker Privately Held
Post-Emergence EBITDA Forecast 6/30/13 26
Low 90
Midpoint EV (Value) 110
Court District Delaware
Equity Value Range
Substantive Consolidation No
Low 67
Duration (Months) 5
Section 363 Asset Sale by Debtor No
Postconfirmation Liquidating Trust No Total Debta 262 21
Resolution Emerged/Reorganized (Private) Consolidated Leverage (x) (15.1) 0.8

Harry & David was challenged by the emergence of low-cost competitors, reduced consumer spending, and poor holiday season results in the years preceding the
bankruptcy filing. The company expected an improvement in sales in the 2010 holiday selling season, but this improvement did not materialize. This left the company
with higher-than-expected inventories and led to higher-than-expected discounting and reduced profit. Cash flow generated during the 2010 holiday season was
insufficient to satisfy the minimum available cash covenant contained in the prepetition credit facility, and the company was unable to continue borrowing under that
facility. Loss of credit facility access contributed to a liquidity crunch. The company closed 56 underperforming stores in early 2011 and operated 69 retail stores as of
June 25, 2011. The bankruptcy was prenegotiated with agreement on the terms of a DIP loan, senior note to equity conversion and a new $55 million equity capital
commitment funded at emergence by certain prepetition senior note holders in order to avoid a “freefall” bankruptcy.

Going-Concern Valuation
The third-party valuation advisor utilized the discounted cash flow, and comparable company and precedent transaction analysis methodologies to estimate a going-
concern enterprise valuation range of $90 million to $130 million.
The multiples, discount rates and names of comparable companies
were not disclosed. The advisor relied on management’s projections, EBITDA Forecast
including the following EBITDA forecast for fiscal years ending ($ Mil.) 2012 2013 2014 2015 2016
June 30: Adjusted EBITDA 21.0 26.4 32.0 39.1 45.5

• Based on discounts to the asset book value as of Aug. 27, 2011, and assumed an 18-month wind-down period. The liquidation analysis alternative assumes that the
bankruptcy cases are converted cases under Chapter 7 on Aug. 27, 2011.
• The total distributable value was estimated to be in the range of $99.5 million to $103.2 million. Unsecured creditors and the PGBC claims would have received $0
recovery under this alternative.
• The analysis included the following book values and liquidation estimates:
o Cash of $7.4 million valued at 100% of book value
o Inventory of $34.9 million valued at 38%–49% of book value
o Property, plant, and equipment of $181.4 million valued at 44%–46% of book value
a
Emergence debt of $21 million is a Fitch estimate based on the Sept. 13, 2011 asset-based lien exit loan balance. There was no term debt outstanding at exit.
DIP – Debtor in possession. PBGC – Pension Benefit Guaranty Corporation.
Source: Fitch Ratings, company disclosure statement dated June 24, 2011.

September 28, 2016
Leveraged Finance
Harry & David Holdings, Inc. (Continued)

DIP or Other $100 Million Senior-Lien DIP 76 100.0 RR1 55 21 — — — —
Administrative Facility and $55 Million Junior-
Lien Notes DIP
Secured $105 Million Revolving Credit 0 N.A. RR1 — — — — — —
Facility
Unsecured $59.2 Million Senior Floating 206 2.0–17.4 RR6 — — — — 20 —
Rate Notes Due 2012 and
$147.5 Million Senior Notes Due
2013
Unsecured PBGC 36 2.0–17.4 RR6 3.6 — — — — —
Unsecured General Unsecured 35 10.0 RR6 0.4 — — — — —
Equity Equity Interests in Harry & 0 0 RR6 — — — — — —
David Holdings
Estimated Claims 353 — Recoveries 62.1 21 0 0 20 0

DIP or Other $100 Million Senior-Lien DIP • Secured, superpriority asset-based lien (ABL) revolving credit facility.
Administrative Facility and $55 Million Junior- • The ABL DIP borrowings were repaid with drawings from a $100 million exit facility, which would also provide
Lien Notes DIP funds for working capital and other corporate purposes.
• The junior-lien DIP was provided by a subset of the senior noteholders that provided the backstop equity
commitment to assure sufficient new equity funding would be raised. The new equity from the rights offering
was used to repay the junior DIP note debt.
• Fitch assumes the $55 million junior term loan was fully drawn and the ABL had $21 million of borrowings
(which was the Sept. 13, 2011, ABL balance) for distribution purposes.
Secured $105 Million Revolving Credit • There were no borrowings on the petition date.
Facility • The facility was not available for borrowings because of a minimum liquidity covenant violation prior to the
petition date.
• Borrowings were paid in full prior to the bankruptcy date.
• The revolver was secured by all assets.
Unsecured $59.2 Million Senior Floating • Holders received their pro rata share of 13% of the new equity.
Rate Notes Due 2012 and • The rights offering permitted qualified noteholders to purchase 74.9% of the stock of the reorganized debtors
$147.5 Million Senior Notes for $55 million. The estimated claim amount of $206 million includes $198 million of principal and approximately
Due 2013 $8 million of accrued and unpaid interest.
• There was $58 million of senior floating-rate notes and $140 million of senior fixed-rate notes outstanding on
the petition date.
Unsecured PBGC • The pension plan obligation was one of the company’s largest liabilities.
• The plan was underfunded by approximately $23.6 million as of Jan. 1, 2011.
• The company paid $8.9 million in termination premiums over a 12-month period.
• The PGBC claim was permitted in the amount of $36 million and received 10% recovery in the form of cash.
Unsecured General Unsecured • Holders received 10% recovery in cash.
Intercompany Intercompany Claims • Received no distributions.
• Deemed to have rejected the plan or reorganization.
Equity Equity Interests in Harry & • Received no distributions.
David Holdings • Deemed to have rejected the plan or reorganization.
DIP – Debtor in possession. N A – Not applicable. RR – Recovery Rating. PBGC – Pension Benefit Guaranty Corporation.

September 28, 2016
Leveraged Finance
Harry & David Holdings, Inc. (Continued)

Cash on Filing Date Not disclosed. $32 million cash and cash equivalents as of June 25, 2011.
Prepetition Bank Facility Commitments $105 million revolving credit facility.
Was the DIP a New Money Facility or Roll Up of a The $100 million first-lien DIP replaced the prepetition revolving credit facility. The $55 million junior-lien DIP
Prepetition Facility? was a new money facility.
Executory Contracts The company estimated lease termination claims of approximately $14.2 million. The company obtained
bankruptcy court approval to reject “dark store” leases at 53 store locations. The company had exited each of
these 53 unprofitable store locations just prior to the bankruptcy filing and continued to operate 69 retail
locations.
Deficiency Claims No
Contingent Claims No material contingent claims.
Intercompany Claims Received no distributions under the plan.
Pension Claims/Motions The court approved a distress termination of the pension plan in bankruptcy. The unfunded pension liability was
approximately $23.6 million as of Jan. 1, 2011. The PBGC claim was treated as an unsecured claim and
received claim distributions in the form of a pro rata share of new common stock and participation in a rights
offerings.
DIP – Debtor in possession. PBGC – Pensions Benefit Guaranty Corporation.
Harry & David — Bond Price History

($140 Mil. 9.0% Senior Notes Due 2013)
(% of Par)
100
80
Filing Date: 3/28/11
60
40
20
0
3/10 4/10 5/10 6/10 7/10 8/10 9/10 10/10 11/10 12/10 1/11 2/11 3/11
Source: Bloomberg.

September 28, 2016
Leveraged Finance
Hub Holdings Corp. (formerly Anchor Blue Retailing Group, Inc.)

Subsector Specialty Casual Apparel Chain Key Driver Untenable Capital Structure
Petition Date Assets Not Disclosed
Emergence Parent Company Name/ Not Applicable/Did Not Emerge Financial Profile
Ticker
Prepetition EBITDA Not Available N.D.
Bankruptcy Summary Post-Emergence EBITDA Forecast N.A. N.A.
Duration (Months) 21 Midpoint EV/Post-Emergence EBITDA Estimate (x) N.A.
(as Going Concern and Liquidation)
Resolution Section 363 Sale and Liquidating Plan Total Debt 90 0
Consolidated Leverage (x) N.D. N.A.

The company had several years of operating losses following its 2005 recapitalization due primarily to the underperformance of the Anchor Blue segment. The decline in
the housing market and the recession led to cutbacks in consumer spending, which exacerbated the poor performance. The teen clothing market was very competitive
and subject to changing teen preferences in fashion. Trade vendors tightened terms and liquidity became very tight by 2009.
The company and its board of directors determined that a Chapter 11 filing and sale of all assets of the Anchor Blue and Levis/Dockers outlets divisions via auctions and
closing unprofitable Anchor Blue store locations was the best strategy. During the bankruptcy, the two divisions were sold as going concerns and the company held
store closing sales for 60 of its 251 stores.

a
Company Value Determined by Sum of Asset Sale Proceeds
Hub Holdings sold its two divisions in two separate transactions and conducted going out of business sales at the 60 unprofitable store locations that were excluded
from the sales transactions. The sales were the result of auctions. The company entered an agreement to sell its 73 Levi’s/Dockers outlet stores (including inventory and
leases) to an affiliate of Levi Strauss & Co. on the May 27, 2009 petition date for total proceeds of $72 million, subject to adjustments. An agreement to sell its Anchor
Blue Stores to Ableco Finance LLC (as term loan lender agent) was entered on the same date for a purchase price of $16.75 million. The consideration was paid as a
credit against outstanding revolver and term loans. The Levi’s/Dockers sale closed in July 2009 and the Anchor Blue transaction closed in August 2009. The proceeds of
the sales of the two divisions were $88.75 million.

There was no liquidation analysis provided. The company had sold its two divisions and distributed the sales proceeds and completed closing of stores that were not
sold prior to the disclosure statement date. There were few assets remaining as of the disclosure statement date. The disclosure statement noted that if the case was
converted to a Chapter 7, and a trustee was appointed then distributions on allowed claims would be lower and take longer to distribute than under the plan.
a
Source of sales proceeds were the asset purchase agreements dated May 27, 2009. N.A. – Not applicable. N.D. – Not disclosed. DIP – Debtor in possession.
Source, unless otherwise noted: Disclosure statement for the first amended joint plan of reorganization dated Jan. 6, 2011.

September 28, 2016
Leveraged Finance
Hub Holdings Corp. (formerly Anchor Blue Retailing Group, Inc.) (Continued)
Wachovia DIP Revolving
DIP or Other Facility (Converted from
Administrative Prepetition) 19 100.0 RR1 19 — — — — —
Secured Other Secured 0.2 100.0 RR1 0.2 — — — — —
Secured Ableco Finance LLC Loan 79 90.0 RR2 70.5 — — — — —
Unsecured General Unsecured 34.5 2.0–4.0 RR6 0.7 — — — — —
Intercompany Intercompany 0 0 RR6 — — — — — —

DIP or Other Wachovia DIP Revolving Facility • The Wachovia prepetition revolver was converted to a superpriority administrative status DIP facility.
Administrative (Converted from Prepetition) • Unimpaired
• The revolver claims were paid in full using proceeds of the Levi’s/Dockers outlet stores asset sale.
• Governed by an accounts receivable and inventory ABL borrowing base.
Secured Other Secured • Unimpaired, paid in full.
Secured Ableco Finance LLC Loan • The Fitch estimate of recovery rate is based on the weighted average recovery of the secured portion and the
$8.65 million deficiency claim portion of the loan that was classified as a general unsecured claim.
• $8.65 million of the $79 million term loan claim was classified as a general unsecured claim pursuant to a
compromise and settlement agreement that was approved by the court on June 30, 2009.
• The unsecured portion received 2%–4% recovery and the secured portion of the loan was paid in full with the
proceeds from the Levi’s/Dockers and Anchor Blue asset sales.
Unsecured General Unsecured • The claim amount includes the unsecured portion of the Ableco Finance LLC term loan.
Intercompany Intercompany • No recovery.
• Canceled in the substantive consolidation.
Equity Equity Interests • No recovery.
• Deemed to reject the plan.
Source, unless otherwise noted: Disclosure statement for the first amended joint plan of reorganization dated Jan. 6, 2011.

September 28, 2016
Leveraged Finance
Hub Holdings Corp. (formerly Anchor Blue Retailing Group, Inc.) (Continued)
Prepetition Bank Facility Commitments $120 million prepetition secured facility consisting of a $85 million term loan and $35 million revolving credit
facility.
Prepetition Bank Facility Borrowings on Filing Date Approximately $91 million consisting of $76 million of remaining term loan borrowings and $14.5 million of
revolver borrowings.
Was the DIP a New Money Facility or Roll Up of a The DIP was a roll up of the prepetition revolver.
Executory Contracts All 255 stores were leased. The respective buyers of the two divisions assumed the leases for the stores that
were sold as going concerns. The leases on the 60 stores that were closed were rejected.
Deficiency Claims Yes. The unsecured portion of the term loan was treated as a general unsecured claim and received recoveries
in the 2%–4% range.
Contingent Claims Disputed claims.
Intercompany Claims No distributions were made to intercompany claims, which were canceled in the substantive consolidation.
Pension Claims/Motions Not disclosed.
Source: Fitch Ratings, company disclosure statement dated Jan. 6, 2011.

September 28, 2016
Leveraged Finance
Linens ’n Things, Inc.


Subsector Home Textiles Key Driver Untenable Capital Structure
Emergence Parent Company Name/Ticker Not Applicable
Financial Profile
Bankruptcy Summary Post-Emergence EBITDA Forecast — N.A.
a
Effective Date Did Not Emerge High 0
Total Debt 1,032 0
Resolution Liquidation (Converted to Chapter 7)
Consolidated Leverage (x) (23.5) N.A.
Debt Shed in Bankruptcy — 1,032

In early 2006, Linens ’n Things implemented a turnaround plan designed to increase sales and improve efficiencies. However, a number of factors adversely affected
profitability and cash flows. The primary causes of lower cash flows were the housing crisis and a tightening of credit markets. This led to lower spending by consumers
on home textiles and a tightening of credit terms by the company’s suppliers.
There were several rounds of unprofitable-store closings during the bankruptcy, which resulted in the closure of 182 of the 589 stores prior to the decision to liquidate.
The debtors did not meet the deadline for filing the plan of reorganization contained in the DIP credit agreement because they were unable to gain the support of the
senior noteholders. The company attempted to find a buyer to continue the business as a going concern but did not get any satisfactory bids. At that point, a decision
was made to sell all remaining assets and liquidate the remaining stores.

Liquidation Proceeds Establish Value
The disclosure statement did not provide an enterprise valuation of estimated going-concern basis values for the various claimants as the decision to liquidate the
company was made prior to publication.
Fitch estimates a total liquidation value of $592 million based on the sum of estimated liquidation sales proceeds and other assets.
The table to the right provides a summary of remaining asset value as of the plan Remaining Asset Value
of reorganization confirmation date based on the balance sheet published as part ($ Mil.) 1/31/09
of the monthly operating statement dated Jan. 31, 2009 (filed as an 8-K). Note
that from the petition date to Jan. 31, 2009, debtor-in-possession borrowings of Book Value of Remaining Assets 467
$393 million were paid in full and the amount of other debts, including the senior Less Intangible Assets and Goodwillb (377)
secured notes, were reduced during the bankruptcy period using liquidation Tangible Asset Book Value 90
proceeds received prior to Jan. 31, 2009. The sum of the paydowns are part of the
Less Liabilities Not Subject to Compromise Plus Priority 36
company’s total asset value and recovery values.
Claims
Remaining Liquidation Value for Claim Distributions 55
Allowed Claims for Remaining Senior Secured Notesc 525
a
All U.S. entities filed Chapter 11. The Canadian affiliates filed a separate bankruptcy petition in Canada. bAssumed to have $0 value following liquidation of goods and
store closures. c$525 million was balance disclosed on the Jan. 31, 2009, monthly operating report balance sheet. Note: The total liquidation value of $592 million was
estimated by Fitch as the sum of (asset sale proceeds of $537 million used to pay down debt prior to Jan. 31, 2009, which included $393 million of DIP loans,
$144 million of senior notes and the $55 million estimated remaining value for claim distributions as of Jan. 31, 2009. Source of $55 million estimated remaining asset
value is monthly operating statement dated Jan. 31, 2009.
Source, unless otherwise noted: Company disclosure statement dated Jan. 16, 2009.

September 28, 2016
Leveraged Finance
Linens ’n Things, Inc. (Continued)

DIP $700 Million DIP Facility 0 100 RR1 393 — — — — —
$700 Million Senior Secured
Secured Credit Facility 0 100 RR1 — — — — — —
Senior Secured Floating Rate
Secured Notes Due 2014 669 25–30 RR5 199 — — — — —
Secured Other Secured Claims 1 100 RR1 1 — — — — —
Unsecured Trade Debt 900 >0 — N.A. — — — — —
a
Estimated Claims 1,569 — Recoveries 593 0 0 0 0 0

DIP $700 Million DIP Facility • The DIP had superpriority replacement liens of same validity and priority as prepetition senior-secured facility
liens, and was permitted to use cash collateral of the senior noteholders and to prime the liens of the senior
noteholders.
• Borrowings under the prepetition senior secured credit facility were rolled into DIP borrowings.
• All DIP borrowings ($393 million as of Jan. 31, 2009) were repaid prior to the disclosure statement date using
asset sale proceeds.
Secured $700 Million Senior Secured • Petition date borrowings of $369.3 million and letters of credit of $61.1 million were fully repaid with the first
Credit Facility drawdown of the DIP facility.
• Secured by first lien on inventory, receivables, and certain other collateral (prepetition collateral) and second lien
on real estate, equipment, capital stock, certain deposit accounts, and other collateral (indenture collateral).
Secured Senior Secured Floating Rate • Claim consisted of principal of $650 million plus $18.9 million accrued interest.
Notes Due 2014 • Secured by a first lien on the indenture collateral and second lien on the prepetition collateral.
• The recovery estimate is based on the petition date principal and interest balance of $669 million and the
$144 million repayment with proceeds of the liquidation sales prior to the disclosure statement date and the
$55 million estimate of remaining liquidation value disclosed in the Jan. 31, 2009, monthly operating report. The
30% recovery assumes $0 payments to the trade creditors.
Secured Other Secured Claims • Paid in full.
Unsecured Trade Debt • Petition date balance of $164.7 million. There was no information on distributions other than the general
unsecured class was entitled to vote. There was some nominal recovery for holders in the form of distributions
from the unsecured creditor trust.
Intercompany Intercompany Claims • All intercompany claims were canceled.
a
Includes cash repayments of DIP prior to disclosure statement publication. DIP – Debtor in possession. RR – Recovery Rating. N.A. – Not available.
Source: Company disclosure statement dated Jan. 16, 2009.
Linens 'n Things, Inc. — Bond Price History

$650 Mil., Floating Rate L + 562.5, Senior Secured Notes, 2014
(% of Par)
120
Filing Date: 05/02/08 Confirmation Date: 06/15/09
100
80
60
40
20
0
Source: Bloomberg.

September 28, 2016
Leveraged Finance
Linens ’n Things, Inc. (Continued)

Cash on Filing Date $26.5 million on May 1, 2008.
Prepetition Bank Facility Commitments $700 million senior secured credit facility.
Prepetition Bank Facility Borrowings on Filing Date Petition date credit facility borrowings of $369.3 million and letters of credit of $61.1 million were fully repaid with
the first drawdown of the DIP facility.
Was the DIP a New Money Facility or Roll Up of a Portion was new money and portion roll up. Prepetition bank facility debt was rolled into the DIP facility.
Executory Contracts All contracts deemed to be rejected except those listed in the plan supplement (list not disclosed). Claims
classified as general unsecured.
Deficiency Claims Yes
Contingent Claims The amount of allowed 503(b)(9) administrative claims was not finalized. The amount of these claims asserted
in demand letters was $68 million, but the company believed the final allowed claim would be substantially lower
than this amount and was disputing the claims.
Intercompany Claims Intercompany claims were canceled and holders received $0 distribution.
Pension Claims/Motions Debtor terminated pension plan. Claims not disclosed.
Recipient Trade claims.


September 28, 2016
Leveraged Finance
Loehmann’s Holdings Inc. (2010)


Subsector Off-Price Specialty Retail Key Driver Untenable Capital Structure
Emergence Parent Company Name/ Loehmann’s Holdings Inc./ Financial Profile
Ticker Privately Held
a
Prepetition EBITDA 2010 (22)
Bankruptcy Summary Post-Emergence EBITDA Forecast 2011 3
Plan Proposed by Joint Plan of Debtor and Creditor Low 89
Substantive Consolidation Certain classes Midpoint EV (Value) 101
Petition Date 11/15/10 Equity Value Range b
Resolution Emerged/Reorganized (Private) Petition Date Emergence Date
Total Debt 141 40
Consolidated Leverage (x) (6.3) 14.7

Loehmann’s incurred significant operating losses in the several years prior to its Chapter 11 filing as a result of a weakening sales trend and high cost structure. The
economic downturn in 2008–2009 adversely affected the company’s sales performance, while the company’s undifferentiated merchandise assortment and presentation
led to its weakening competitive position in light of increased competition particularly in the off-price channel out of the recession.
In addition to the weak topline trends, Loehmann’s high cost structure (SG&A expenses accounted for close to 40% of sales prior to petition versus midteen to 30% seen
between strong off-price competitors and large department stores) constrained its profitability and FCF generation. The operating losses weakened the company’s
liquidity position.
Several months prior to the petition, Loehmann’s asset-based lender GECC denied the company’s request to amend its $55 million facility to enhance liquidity. The
overall tight liquidity and an erroneous New York Post report (claiming the company missed an interest payment on its debt and as a result certain suppliers withheld
shipments to stores) resulted in its inability to obtain merchandise before and during the crucial holiday selling season in 2010. The company had to stretch payment
terms with merchandise vendors, which further limited its ability to source product.

Going-Concern Analysis
The third-party valuation advisor relied on three valuation methods to estimate a midpoint
going-concern enterprise valuation of $101 million. The methodologies used included a
comparable company analysis, the discounted cash flow method and a precedent EBITDA Forecast
transaction analysis. The assumptions and names of comparable companies were not ($ Mil.) 2011 2012 2013
disclosed. The advisor relied on management’s financial projections, which included the
following EBITDA forecast: EBITDA 3 16 30

• Based on discounts to book value of balance sheet assets as of Feb. 28, 2011.
• The total gross proceeds were estimated to be in the range of $22 million to $35 million with a midpoint of $28.4 million.
• The midpoint book values and percentages applied included:
o Cash of $2 million at 100% of book value
o Accounts receivable of $5.4 million at 80%–85% of book value
o Inventory of $45 million at 30%–50%
o Intellectual property of $10 million at 5%–15%
• The alternative would have resulted in estimated recoveries for series A noteholders in the range of 0%–10%, compared to 37% in the plan of reorganization.
a
Company forecast for 2010 EBITDA; no full-year prepetition EBITDA is available. bThe $61 million midpoint equity value includes the maximum $25 million proceeds
from the rights offering for convertible preferred stock made to Series A noteholders. SG&A – Selling, general and administrative.
Source, unless otherwise noted: Amended disclosure statement for the second amended joint plan of reorganization dated Jan. 10, 2011.

September 28, 2016
Leveraged Finance
Loehmann’s Holdings Inc. (2010) (Continued)

DIP or Other Priority Claims 1.5 100.0 RR1 1.5 — — — — —
Administrative
Secured Credit Agreement Secured Claims 30.5 100.0 RR1 30.5 — — — — —
Secured Class A Notes Claims 80.4 37.1 RR4 — — — — 30 —
Secured Class B Notes Claims 38 13.8 RR5 — — — — 5 —
Unsecured General Unsecured Claims 26.2 7.6 RR5 2 — — — — —
Intercompany Intercompany N.A. 100.0 RR1 — — — — — —
Equity Equity N.A. 0 RR1 — — — — — —
Estimated Claims 176.6 — Recoveries 34 0 0 0 35 0
Emergence Date

DIP or Other Priority Claims • Legal expenses and professional fees remaining as of the disclosure statement date.
Administrative
Secured Credit Agreement • Consisted of borrowings outstanding under the prepetition credit agreement provided by Crystal Financial.
Secured Claims • The secured prepetition claims were rolled into a $45 million superpriority DIP facility provided by Crystal
Financial and Whippoorwill as the largest holder of the prepetition secured notes.
Secured Class A Notes Claims • Consisted of $75 million prepetition Class A secured notes (12% notes and 8.4625% floating rate notes) plus
accrued interest.
• Issued in 2004 along with the Class B notes by Loehmann’s Capital Corp. (CapCo) to fund a sale and lease-
back transaction with Loehmann’s Opco.
• Secured by CapCo’s rights to the leased assets under the lease documents and its rights to receive annual
rental payments from Loehmann’s Opco in the amount of approximately $14 million.
• Holders that voted to accept the plan were eligible to participate in a $25 million equity investment pursuant to
a rights offering for convertible preferred stock that was convertible into 47.2% of the new common stock.
• Holders received recovery in the form of 42.4% of the new common stock.
Secured Class B Notes Claims • Consisted of $35 million prepetition Class B secured notes (13% notes) plus accrued and unpaid interest.
• Issued in 2004 along with the Class A notes by Loehmann’s Capital Corp. (CapCo) to fund a sale and lease-
back transaction with Loehmann’s Opco.
• Holders received distributions in the form of 8.46% of the new common shares.
• Secured by CapCo’s rights to the leased assets under the lease documents and its rights to receive annual
rental payments from Loehmann’s Opco in the amount of approximately $14 million.
Unsecured General Unsecured Claims • Primarily consisted of prepetition trade claims and lease rejection claims.
• Lease rejection claims were estimated to be $11 million.
Intercompany Intercompany • Holders received no distributions under the plan of reorganization.
• The debtor reserved the right to reinstate any or all of the intercompany claims
• Unimpaired deemed to accept.
Equity Equity • Holders received no distributions under the plan of reorganization.
Source: Amended disclosure statement for the second amended joint plan of reorganization dated Jan. 10, 2011.

September 28, 2016
Leveraged Finance

Cash on Filing Date $5.3 million as of July 31, 2010.
Prepetition Bank Facility Commitments $45 million asset-based revolving credit facility with first-priority lien on receivables and inventory.
Prepetition Bank Facility Borrowings on Filing Date $30.5 million borrowed under the $45 million revolver as of the petition date.
Was the DIP a New Money Facility or Roll Up of a The DIP facility was partially a roll up of the prepetition facility provided by Crystal Financial (originally
Prepetition Facility? $45 million reduced to a $33 million Tranche A revolving loan) and partially a new money facility
($7 million junior DIP facility provided by Whippoorwill as the largest holder of the prepetition secured notes).
Executory Contracts Yes. The company anticipated $11 million of claims related to lease rejections.
Deficiency Claims Not available.
Contingent Claims Not disclosed.
Intercompany claims received no distributions under the plan of reorganization but claims could be reinstated on
Intercompany Claims emergence at the company’s option.
Pension Claims/Motions Loehmann’s had no defined benefit pension plan.

September 28, 2016
Leveraged Finance
Loehmann’s Holdings Inc. (2013)


Subsector Discount Apparel Key Driver Untenable Capital Structure
Prepetition Ticker Symbol Not Public
Emergence Parent Company LHI Liquidation Co./Liquidated 12-Month Period Amount
Name/Ticker Prepetition EBITDA N.A. Privately Held
Post-Emergence EBITDA Forecast N.A. Liquidated
Bankruptcy Summary
Court District New York — Southern High 22
Resolution Liquidation (Under Chapter 11) Consolidated Leverage Not Disclosed N.A.

Loehman’s Holdings Inc. made unsuccessful strategic, financial and operating decisions after emerging from its prior bankruptcy in 2011. This led to underperformance
of stores, reduced margins, lower inventory turnover and a lack of liquidity. In addition, the capital structure was highly leveraged, and this impacted inventory, created
vendor concerns that limited the company’s ability to source high-visibility brands and led to reduced cash flow. The company faced increasing competition in the off-
price retail channel from larger, better capitalized chains such as Ross Stores, Inc. and TJX. Cash flow and credit facility availability was unlikely to meet capex and
operating needs beyond the first quarter of 2014. In September 2013, the company started exploring restructuring alternatives, including finding a new investor, replacing
the working capital lender, reducing costs and exploring a sale of all assets in the 39 stores. In November 2013, a marketing process for the sale of the business was
initiated, but no going concern bids for the business were received.

Estimated Recoveries from Liquidation Sales Provided Rough Estimate of Value
In January 2014, an auction was held, and the company selected a joint venture comprising SB Capital Group, LLC, Tiger Capital Group LLC and A&G Realty Partners,
LLC as the winning bidder. The price was 29.8% of the value of the retail value of the merchandise plus the greater of $200,000 or 10% of the proceeds of the sale of
augmented inventory provided by the bidder, plus 75% of the proceeds of certain consigned goods, $400,000 for furniture and fixtures and cash on hand in the stores on
the closing date of the sales. Madison Capital agreed to purchase the designation rights for real estate for $6.35 million plus 10% of the proceeds from lease
assignments after Madison Capital received $2.5 million from lease assignments. Esopus Creek Value Series Fund LP was the successful bidder for intellectual property
and customer information with a bid of $850,000 and Blackwell Partners bought a potential claim relating to a Visa/MasterCard fee litigation for $530,000.
The proceeds of the Chapter 11 liquidation sales were not disclosed. However, the amended disclosure statement provides an estimate of the recoveries by seniority.
Fitch sums the recovery amounts to estimate the total value.

There was no Chapter 7 liquidation alternative analysis provided in the disclosure statement.

Source, unless otherwise noted: First amended disclosure statement for joint plan of liquidation dated May 28, 2014.

September 28, 2016
Leveraged Finance

DIP and Priority Administrative and Priority 2 100.0 RR1 2 — — — — —
$35 Million ABL First-Priority Credit
Secured Agreement Claims 12 100.0 RR1 12 — — — — —
Secured Second-Priority Credit Agreement Claims 14 40.0–46.0 RR4 6 — — — — —
Third-Priority PIK Credit Agreement
Secured Claims 72 0.0 RR6 — — — — — —
Unsecured General Unsecured Claims 46 1.0 RR6 0.5 — — — — —

DIP and Priority Administrative and Priority • Includes priority and nonpriority tax claims and remaining administrative cost estimate.
Secured $35 Million ABL First-Priority Credit • Petition date usage consisted of $4.3 million of loans and $8.6 million of letters of credit.
Agreement Claims • This was a borrowing base facility.
• Balances were paid in full with proceeds of cash collateral and liquidation sales prior to the disclosure
statement date.
Secured Second-Priority Credit Agreement Claims • The case wind-down agreement provided that second-priority lenders would receive 92.5% of the net
distributable value from the liquidation sales, plus the $5.7 million previously paid on Jan. 27, 2014,
plus the second-lien reduction payment (as defined). Holders of general unsecured claims will receive
7.5% of the net distributable value plus the GUC true-up amount.
• The disclosure statement indicated $14.46 million of allowed claims and a recovery rate in the range of
39.78%–46.24%.
Secured Third-Priority PIK Credit Agreement • Received $0 distributions under the plan per agreement.
Claims • Deemed to have rejected the plan of reorganization.
• Prepetition PIK interest rate of 17%.
Unsecured General Unsecured Claims • Received 7.5% of the net distributable value in cash, plus any proceeds from the general unsecured
creditors litigation trust.
• Petition date trade payables that were past due were $16.7 million.
Equity Equity Interests • $0 recoveries.
RR – Recovery Rating. DIP – Debtor in possession. ABL – Asset-based loan. PIK – Pay in kind. N.A. – Not available.
Source, unless otherwise noted: First amended disclosure statement for joint plan of liquidation dated May 28, 2014.

September 28, 2016
Leveraged Finance

Cash on Filing Date $2.1 million, including $1 million of restricted cash per monthly operating report for the period Dec. 16, 2013 to
Jan. 4, 2014.
Prepetition Bank Facility Commitments $35 million ABL first-priority revolver (petition date borrowing base was not disclosed), $10 million second-lien
subordinated credit agreement and $56.3 million third-lien pay in kind (PIK) credit agreement.
Prepetition Bank Facility Borrowings on Filing Date $4.3 million of borrowings plus $8.8 million of letters of credit under the ABL revolver, $14.46 million under
second-lien agreement and $71.9 million under the third lien.
Was the DIP a New Money Facility or Roll Up of a There was no DIP facility.
Other Notable Issues This was the third filing by Loehmann’s, with prior filings in 1999 and 2010.
Executory Contracts 38 leases were rejected. Three leases were to be assigned and assumed by Madison Capital, the bidder for
certain real estate assets. All employee benefit and compensation programs were terminated.
Deficiency Claims None
Contingent Claims and/or Contingent Recoveries Contingent recoveries from causes of action to be pursued by the litigation trustee.
Intercompany Claims No distributions.
Recipient and Comments General unsecured creditors received distributions as a result of the case wind-down agreement.
Source: Fitch Ratings, disclosure statement dated May 28, 2014.

September 28, 2016
Leveraged Finance
Movie Gallery Inc.


Subsector Video Rental and Sales Stores Key Driver Untenable Capital Structure
Prepetition Ticker Symbol MVGR
Emergence Parent Company Name/ Not Applicable Financial Profile
Ticker 12-Month Period Amount
Bankruptcy Summary Post-Emergence EBITDA Forecast Did Not Emerge
b
N.A.
Enterprise Value (EV) Range — Liquidation Value
Did All Entities in the Group File?a No
Low 145
High 155
Court District Eastern District of Virginia
Midpoint Liquidation Value 150
(Richmond Division)
Substantive Consolidation Yes Equity Value Range
Effective Date 11/18/10 Midpoint EV/Post-Emergence EBITDA Estimate N.A.
Duration (Months) 9
Assets (as Liquidation) Petition Date Emergence Date
Voluntary or Involuntary Filing Voluntary Total Debt 660 0
Postconfirmation Liquidating Trust Yes Consolidated Leverage (x) (20.0) N.A.
Resolution Liquidation (Under Chapter 11) Debt Shed in Bankruptcy — 660

Prior to this second Chapter 11 filing in 2010, Movie Gallery emerged from its first bankruptcy proceeding in 2008. Despite the deleveraging through debt to equity
conversions in the first bankruptcy, the business continued to have problems generating adequate cash flow to service its debt. A number of factors contributed to the
second Chapter 11 filing in 2010, including intense competition and weak liquidity. The video rental and retail video sales market was highly competitive with direct
competitors like Netflix, supermarket rental kiosks, and Blockbuster as well as indirect competitors like cable movies, the internet, and video on demand. There was
cannibalization of the rental business by low-priced videos available for sale. In addition, the company’s video game business was hurt by a decline in sales of Wii
software and hardware as well as games in the music genre. Liquidity began to suffer in second-half 2009 and the company became delinquent on payables and faced
looming covenant defaults. The business was generating negative free cash flow and by fourth-quarter 2009 covenant breaches were anticipated by management.

Partial Asset Sales
The Chapter 11 bankruptcy plan was a plan of liquidation and there was no going-concern analysis completed. On the bankruptcy date, Movie Gallery owned
approximately $78.9 million and $160.5 million of merchandise and movie and games inventory, respectively, and $30 million of equipment, furniture, and property. The
liquidation of the inventory occurred in stages. First, the closing of certain stores was completed with the assistance of Gordon Brothers as the company intended to
close unprofitable locations and reduce the store base. Several months later, the decision was made to liquidate the entire chain. Movie inventory was sold for $74
million (subject to adjustment per a sharing mechanism) to Great American (liquidation agent) as a result of a bankruptcy court auction for all remaining store inventory
under a May 2010 agency agreement for a going-out-of-business sale. The Great American inventory sale closed in May 2010. In later asset sales, movie inventory held
in the Nashville distribution center was sold for $5 million, and video game inventory was sold for $3 million in July 2010.
$150 Million Total Rough Estimate of Liquidation Value

Fitch estimates a rough total liquidation value of $150 million based on the sum of debt repayments made using liquidation proceeds, including $100 million revolver
repayments $36 million–$43 million on term loan claims and less than $5 million on unsecured claims. The disclosure statement included a Chapter 7 liquidation analysis
prepared by management for the $165.6 million book value of remaining assets as of Oct. 1, 2010.
The range of liquidation proceeds was estimated to be $101.7 million–$105.6 million for the remaining $165.6 million of balance sheet assets on Oct. 1, 2010. The
largest component of the remaining liquidation value was remaining cash of $100.5 million (which had been primarily raised through the prior sales of inventory in
bankruptcy). Cash was valued at 100% of book value in the analysis ($100.5 million total) and other remaining assets were values at a percentage of book values as
follows: Inventory was valued at 7%–13%; intangible assets were valued at 5%, and prepaid expenses were valued at 6% of book value.
a
All U.S. debtors were included in the filing, and all Canadian debtors filed a separate insolvency proceeding. bRough estimate based on debt recoveries and
bankruptcy costs. N.A. – Not applicable.
Source, unless otherwise noted: Company disclosure statement for joint plan of reorganization dated Sept. 8, 2010.

September 28, 2016
Leveraged Finance
Movie Gallery Inc. (Continued)

DIP There Was No DIP Facility — — — — — — — — —
Secured Revolving Credit Facility 56 100.0 RR1 56 — — — — —
Secured First-Lien Term Loan 408 8.7–10.5 RR6 36–43 — — — — —
Secured Second-Lien Term Loan 152 <2 RR6 <5 — — — — —
Unsecured General Unsecured Claims N.A. N.A. — <5 — — — — —
Intercompany Intercompany Claims 0 0 — — — — — — —
Equity Equity Claims 0 0 — — — — — 146 —
Estimated Claims 616 — Recoveries 94–104 0 0 0 146 0

DIP There Was No DIP Facility • Cash collateral was used to fund operations during the liquidation period.
Secured Revolving Credit Facility • The revolving credit facility claim was unimpaired.
• The facility commitment amount was $100 million, and it was fully drawn on the petition date and $44 million
was repaid prior to the disclosure statement date with store inventory liquidation proceeds. The lenders had a
first priority lien on assets.
• In addition to the partial repayments during the bankruptcy, the liquidation analysis included in the disclosure
statement estimated an Oct. 1, 2010 remaining balance of $55.7 million that was paid on the effective date.
• The remaining revolver borrowings and accrued interest were paid in full in cash.
Secured First-Lien Term Loan • The first-lien term loan claims were impaired.
• There was $370 million of principal outstanding on the petition date. The first-lien lenders received partial
recoveries from the First-Lien Lender Liquidating Trust, which was funded with all liquidation proceeds after
payment of administrative, priority and revolver claims, except for the $5 million placed into the trust for
unsecured creditors.
Secured Second-Lien Term Loan • $146.3 million was the amount of principal outstanding on petition date. Second-lien claims also included
interest and fees.
• The claims were permitted as general unsecured claims and holders shared proceeds of the $5 million
unsecured liquidating trust.
Unsecured General Unsecured Claims • The amount of allowed general unsecured claims was not estimated in the disclosure statement. $5 million
was put into a liquidating trust for distribution to unsecured claims.
Intercompany Intercompany Claims • Intercompany claims were not allowed and were deemed to reject the plan.
Equity Equity Claims • No recovery
Source, unless otherwise noted: Company disclosure statement for joint plan of reorganization dated Sept. 8, 2010.

September 28, 2016
Leveraged Finance
Movie Gallery Inc. (Continued)

Cash on Filing Date $43.5 million on Feb. 3, 2010.
Prepetition Bank Facility Commitments There was no remaining revolver capacity on the petition date. The $100 million revolving credit facility was fully
drawn.
Prepetition Bank Facility Borrowings on Filing Date $100 million revolver and $370.8 million first-lien term loan debt. In addition, there was a second-lien term loan.
Was the DIP a New Money Facility or Roll Up of a There was no DIP facility. The debtor used the cash collateral to fund operations.
Executory Contracts All unexpired leases were rejected. The amount of claims was not disclosed.
Deficiency Claims First-lien term loan lenders waived their deficiency claims against the $5 million trust set up to make
distributions to general unsecured creditors.
Contingent Claims Not available
Intercompany Claims Eliminated through consolidation or cancellation.
Pension Claims/Motions Not applicable, no defined benefit plan. The employee self-funded healthcare plan was terminated.
If Yes, Recipient Class Senior secured revolver.
Recipient Unsecured creditors.
Source, unless otherwise noted: Fitch Ratings, company disclosure statement for joint plan of reorganization dated Sept. 8, 2010.

September 28, 2016
Leveraged Finance
Orchard Supply Hardware Stores Corporation


Subsector Hardware and Garden Stores Key Driver Untenable Capital Structure
Prepetition Ticker Symbol OSH
Emergence Parent Company OSH I Liquidating Corporation/ 12-Month Period Amount
a
Name/Ticker Not Traded Prepetition EBITDA FYE 2/2/13 18
Post-Emergence EBITDA Forecast Not Applicable
Did All Entities in the Group File? Yes Low 222
b
Resolution Acquired, Merged or Sold Consolidated Leverage (x) 12.8 Not Applicable

Declining sales and underinvestment in store operations led to the filing. Orchard Supply was a regional chain of hardware stores in California that experienced a
material sales decline from 2007 to 2010. Revenues decreased from $850 million to $650 million during this period because of three factors: the weak California
economy, continued new-store openings by competitors Home Depot and Lowe’s and chainwide operational deficiencies that primarily stemmed from the highly
leveraged capital structure. The balance sheet had become highly leveraged due to dividends paid to the chain’s former owner, Sears Holdings Corporation. There were
several bank term loan maximum leverage covenant waivers prior to the filing date. Sears spun off its interest to Ares Capital on Dec. 30, 2011.

Sum of Proceeds from Going Concern Asset Sale and Going-Out-of-Business Asset Sales Determined Estimated Company Value
The company sold 70 of its approximately 90 stores for $205 million as a going concern to Lowe’s Corporation in a bankruptcy court-supervised sale. Lowe’s was the
stalking horse bidder and prevailed. Orchard Supply remained a separate brand within in the Lowe’s chain. Approximately 20 stores were closed in a going-out-of-
business sale conducted by Great American Group. The proceeds from the partial chain liquidation are not available, and Fitch assumes roughly $20 million was raised
from the sale of inventory and fixtures at these stores. Lowe’s assumed certain supplier payment liabilities for the stores it acquired, which were not part of Fitch’s
valuation estimate. The estimated $225 million total value represents the sum of the Lowe’s sale of 70 stores for $205 million plus a rough estimate of the proceeds of
the going-out-of-business sales at 20 stores.

The liquidation analysis for the disclosure statement was prepared after the majority of store assets had already been sold and proceeds applied to prepetition secured
borrowings, so the valuation is for the stub value only. At that point, the remaining asset proceeds were estimated to be in the range of $24.1 million and $29.9 million,
consisting of remaining cash of $22.5 million and other asset recoveries. The valuation range is not representative of the entire estimated liquidation value, but rather the
remaining proceeds to be distributed.
a
Source of prepetition EBITDA 10-K for FYE Feb. 2, 2013. bExcludes sale/leaseback debt. FYE – Fiscal year end.
Source, unless otherwise noted: Disclosure statement for the first amended plan of liquidation dated Nov. 12, 2013.

September 28, 2016
Leveraged Finance
Orchard Supply Hardware Stores Corporation (Continued)

Projected Equivalent Secured Unsecured Subordinated New Options/
Claim Seniority Claim Type Allowed Claims Recovery (%) RR Category Cash Notes Notes Notes Equity Warrants
DIP and Priority DIP, Priority and Administrative 117 100.0 RR1 117 — — — — —
Secured $120 Million Senior Secured ABL 0 100.0 RR1 0 — — — — —
Revolving Facility due 2017
Secured Senior Secured Term Loans B1 131 74–86 RR2 104 — — — — —
and B2
Unsecured General Unsecured Claims 25–35 2–3 RR6 1 — — — — —
Equity Common Stock Not Available 0.0 RR6 — — — — — —

DIP and Priority DIP, Priority and Administrative • Paid in full in cash.
• Claim amount not available. The ABL petition date borrowings were $107 million and were repaid with the
DIP. Fitch uses this debt plus $10 million of other miscellaneous administrative and priority claims as the
estimated claim amount.
• The DIP was provided by the prepetition ABL and term loan lenders and agented by Wells Fargo.
• DIP borrowings and proceeds from asset sales were used to pay the ABL lenders in full prior to the
reorganization date, and sales proceeds likely paid down the DIP prior to the plan effective date.
Secured $120 Million Senior Secured ABL • Petition date ABL borrowings of $107 million were paid in full prior to the plan effective date using DIP
Revolving Facility due 2017 borrowings made during the first week of the case.
• The ABL facility was secured by all assets except the equity interests in OSH Properties, LLC and certain
furniture, fixtures and equipment.
• Included a $17.5 million last-out tranche.
Secured Senior Secured Term Loans B1 • Distributions paid out of pro rata share of all remaining assets, including cash, after payment of allowed other
and B2 secured claims (that were paid in full) payments to the general unsecured creditors trust and disputed claims
trust, and payments of administrative and priority claims.
• $104 million is midpoint of estimated distribution proceeds to term loan claims.
• Consisted of two tranches: B1 and B2. The B1 tranche had $54.7 million of borrowings on the petition date
and the B2 tranche, which included a pay-in-kind interest component, had $74.3 million borrowed on the
petition date.
• Terms loans had a junior lien on the ABL collateral.
Unsecured General Unsecured Claims • Certain general unsecured liabilities for trade suppliers were assumed by asset purchaser Lowe’s, and these
were paid in full.
• The general unsecured claims are non-trade related.
Equity Common Stock • Equity owners received no distributions under the plan.
Source, unless otherwise noted: Disclosure statement for the first amended plan of liquidation dated Nov. 12, 2013.

September 28, 2016
Leveraged Finance
Orchard Supply Hardware Stores Corporation (Continued)

Cash on Filing Date Not available. $4.5 million as of July 7, 2013 per monthly operating report filed as 8-K exhibit on Sept. 17, 2013.
Prepetition Bank Facility Commitments $120 million ABL facility and two term loans.
Prepetition Bank Facility Borrowings on Filing Date $107 million of borrowings under the ABL.
Was the DIP a New Money Facility or Roll Up of a Roll up. The $177 million DIP facility was used to repay ABL borrowings in full based on the 8-K filing of the
Prepetition Facility? initial monthly operating report.
Other Notable Issues A liquidation agency agreement for a going-out-of-business sale at certain store locations was signed with Great
American Group WF, LLC following an auction held on June 27, 2013. This agreement covered approximately
17 stores.
Executory Contracts Not available.
Deficiency Claims None noted.
Contingent Claims and/or Contingent Recoveries A general unsecured creditor trust was established to collect and distribute contingent recoveries from proceeds
of designation rights sales and other sources. A $3.7 million disputed claim reserve was also established.
Intercompany Claims No material intercompany claims.
If Yes, Recipient Class Senior secured.
Recipient and Comments General unsecured claims.
Source: Fitch Ratings, company disclosure statement dated Nov. 12, 2013.

September 28, 2016
Leveraged Finance
Penn Traffic Company (2003)


Subsector Supermarket Chain Key Driver Deep Cyclical Trough
Prepetition Ticker Symbol PNFT
Emergence Parent Company Name/ Penn Traffic Co./PTFC Financial Profile
Ticker
a
a
1/28/06 28
Court District New York — Southern High 215
Resolution Emerged/Reorganized (Public) Petition Date Emergence Date
Total Debt 233 26
Debt Shed in Bankruptcy (%) — 88.8

This was Penn Traffic’s second bankruptcy filing and was caused by two main macro factors as well as company specific developments. Key macro drivers of the
bankruptcy included the adverse impact of the recession in late 2001 and competition from large nonunionized retailers that entered the grocery business in the years
prior to the filing date, including Wal-Mart. Company-specific causes of the filing included covenant violations and financial reporting issues. The company was unable to
meet the covenant requirements of its credit facility and received a waiver and forbearance as well as an amendment from the lender group in May 2003. The lenders
tightened facility borrowing requirements in return for approving the waivers. Then, the company was unable to file its fiscal year 2003 10-K on a timely basis or obtain an
unqualified opinion from its independent auditor. Shortly thereafter, Penn Traffic filed bankruptcy.
Penn’s first bankruptcy filing was made in 1999. The reorganization plan for the 1999 filing resulted in a debt-for-equity exchange. $732.2 million of senior notes was
exchanged for $100 million of 11% senior notes and 19,000,000 shares of newly issued common stock, provided for the exchange of $400 million of senior subordinated
notes for 1,000,000 shares of the new common stock plus six-year warrants, and also provided for payment in full for other creditors.

Going-Concern Valuation Estimate
The third-party valuation advisor estimated a going-concern basis enterprise value in the range of $212 million–$258 million. The analysis assumed emergence on or
about Jan. 30, 2005. The advisor utilized management’s forecast (not available), the historical results of 109 core stores, the sale/leaseback of distribution centers, and
discussions with management. The advisor applied the discounted cash flow, peer multiple analysis and comparable transaction valuation methods. The assumptions
used in these analyses were not disclosed.

• The liquidation analysis valuation range of gross proceeds of liquidation was estimated at $212 million to $258 million.
• The analysis estimated administrative costs associated with a liquidation of $17 million–$18 million. Under this scenario, the recoveries for unsecured creditors were
estimated in the range of 0%–9%, compared to 40%–42% under the going-concern plan of reorganization.
a
Source of prepetition and post emergence EBITDA is Penn Traffic 10-K filed Jan. 28, 2006. Note: Actual EBITDA for the fiscal year ended Jan. 28, 2006, is shown
rather than as a post-emergence forecast as projections were not disclosed.
Source, unless otherwise noted: Company disclosure statement in support of first amended plan of reorganization dated Dec. 23, 2004.

September 28, 2016
Leveraged Finance
Penn Traffic Company (2003) (Continued)

DIP or Other $270 Million DIP Facility 30–40 100.0 RR1 30–40 — — — — —
Administrative
Secured Other Secured Claims 4 100.0 RR1 4 — — — — —
Unsecured Postpetition Trade Claims 15 100.0 RR1 15 — — — — —
Unsecured General Unsecured Claims 295–305 40.0–42.0 RR4 — — — — 118 —
Unsecured Convenience Claims 3 15.0 RR5 0.4 — — — — —
Intercompany Intercompany Claims 0 0–100.0 N.A. — — — — — —
Estimated Claims 347–367 — Recoveries 49.4–59.4 0 0 0 118 0
New Borrowings at Emergencea 65 — — — — — — — —

DIP or Other $270 Million DIP Facility • Unimpaired and deemed to have accepted the plan.
Administrative • $200 million of prepetition secured facility borrowings were rolled into the DIP.
• DIP borrowings were partially repaid during the bankruptcy with the proceeds of asset sales and cash from other
sources.
$30 million to $40 million was the estimate of the remaining claims as of the disclosure statement date.
Secured Other Secured Claims • Unimpaired and deemed to have accepted the plan.
• Paid in full through the surrender of the collateral securing the claim. Included mortgages on specific properties.
Unsecured Postpetition Trade Claims • Unimpaired and deemed to have accepted the plan.
• Paid in full in cash.
Unsecured General Unsecured Claims • Received recovery in the form of 100% of the new common equity less the equity provided to employee
compensation plans.
• Included $60 million unsecured PBGC settlement claim, which was a portion of the distributions made in a
settlement for the distress termination of the nonunion cash balance pension plan.
• Also included the $100 million of 11% notes due 2009.
Unsecured Convenience Claims • Claims in the amount of $5,000 or less were paid in cash in an amount equal to 15% of the claim amount.
Intercompany Intercompany Claims • Intercompany claims received $0 distributions.
• The company had the option to cancel or reinstate intercompany claims.
Equity Equity Interests • Equity interests received $0 distributions and were deemed to have rejected the plan.
a
Emergence debt included draws under a $130 million revolver, real estate facility borrowings and a $6 million term loan. The new borrowings funded cash needs of
the plan. RR – Recovery Rating. DIP – Debtor in possession. N.A. – Not applicable. PBGC – Pension Benefit Guaranty Corporation.
Source, unless otherwise noted: Company disclosure statement in support of first amended plan of reorganization dated Dec. 23, 2004.

September 28, 2016
Leveraged Finance

Cash on Filing Date Not disclosed.
Prepetition Bank Facility Commitments $205 million secured revolving credit facility with a $70 million sublimit and a $115 million term loan (original
term loan amount).
Prepetition Bank Facility Borrowings on Filing Date $50 million of revolver borrowings, $99 million term loans, and $49 million of letters of credit.
Was the DIP a New Money Facility or Roll Up of a The DIP was partially a new money facility and partially a roll up. $200 million of prepetition secured facility
Prepetition Facility? claims were paid in full with drawings under the $270 million DIP facility.
Executory Contracts The company was attempting to modify collective bargaining agreements as of the disclosure statement date.
The company rejected approximately 76 store leases as well as approximately 10 other leases. The company
had not yet determined whether to assume or reject the other leases as of the disclosure statement date (344
leases as of the petition date). It should be noted that the bankruptcy occurred prior to the 2005 revisions to the
Chapter 11 code. Routine extensions of the time to decide whether to assume or reject leases were no longer
available for cases after 2005.
Deficiency Claims No, secured claims were paid in full.
Contingent Claims Estimated disputed claims amounts were placed in trust.
Intercompany Claims Extinguished with no distributions or reinstated at the company’s option.
Pension Claims/Motions The company terminated its cash balance plan, which was the principal retirement plan for the non-union
employees and reached a settlement with the PBGC for a distress termination of this plan. The PGBC
settlement provided the PGBC with an administrative claim of approximately $3.6 million and an unsecured
claim of approximately $60 million. The cash balance plan had required over $48 million in funding for the four
years following the disclosure statement date including approximately $24.5 million in fiscal year 2005.


September 28, 2016
Leveraged Finance
Penn Traffic Company (2009)


Fitch Industry Classification Supermarkets and Drug Stores Key Driver Deep Cyclical Trough
Subsector Supermarkets Key Driver Untenable Capital Structure
Prepetition Ticker Symbol PFTC
Emergence Parent Company Name/Ticker Did Not Emerge Financial Profile
Bankruptcy Summary Prepetition EBITDA
a
1/31/09 3.8
Post-Emergence EBITDA Forecast N.A. Did Not Emerge
Court District Delaware Low 85
Filing — Type Chapter 11 Midpoint EV/Post-Emergence EBITDA Estimate (x) N.A.
Yes — Sale of Substantially All
Section 363 Asset Sale by Debtor Assets (as Liquidation)
Resolution Liquidation (Under Chapter 11) Petition Date Emergence Date
Total Debt 67 0
Consolidated Leverage (x) 17.6 N.A.

Underperformance and tightening credit led to the filing. Penn Traffic had two previous bankruptcies prior to the 2009 case (1999 and 2003). The company became
subject to a SEC investigation in 2005 relating to its accounting practices prior to the second emergence from bankruptcy and ultimately incurred related legal and audit
costs of $17 million. The debtors’ business was hurt by the economic downturn in its 79 store geographic footprint that included Northern and Central Pennsylvania,
Northern and Central New York, New Hampshire, and Vermont. The company attempted to mitigate the effects of the downturn by closing stores and cutting overhead.
However, it still had a net loss of $18.3 million in fiscal year (FY) 2009 compared to a net loss of $41.7 million in FY08.
The company’s credit facility was due to mature in 2010, and the lenders began taking steps to preserve the value of their collateral, which reduced liquidity. The
company was unable to secure alternative debt financing. On Oct. 30, 2009, the lenders declared an event of default for borrowing base violations, and the company
filed bankruptcy shortly thereafter.

Enterprise Value Established by Sales Price
The company sold all of its assets to Tops for $85 million based on an asset purchase agreement signed in January 2010. The sale price established the enterprise
value. The agreements with Tops included (i) an asset purchase agreement, (ii) a transition services agreement, (iii) an interim operating agreement, and (iv) and agency
agreement. The agreements included terms of compromises with unions and agreements for Penn Traffic to reject store leases on stores that Tops did not intend to
operate and assume leases on stores that Tops intended to operate as Tops markets.
The Chapter 7 basis liquidation analysis was completed in July 2010, which was after the sale of all assets to Tops markets was completed. The analysis included only
remaining assets as of the analysis (primarily $37.99 million cash on hand that remained after some payments to creditors had already been made). The total liquidation
proceeds were estimated at $43.3 million, which was less than the remaining value under a Chapter 11 liquidation due to Chapter 7 liquidation costs and other related
costs.
a
Source prepetition EBITDA is company 10-K filed April 21, 2009. N.A. – Not applicable.
Source, unless otherwise noted: Company disclosure statement in support of the second amended plan of reorganization dated Sept. 14, 2010.

September 28, 2016
Leveraged Finance

DIP or Priority Priority Nontax Claim 7.4 100.0 RR1 7 — — — — —
Secured Secured Credit Facilities 63 100.0 RR1 63 — — — — —
(Revolver and Term Loan Facility
and Supplemental Real Estate
Facility)
Unsecured Convenience Claims 3.5 10.0 RR1 3.5 — — — — —
Unsecured Unsecured Claims 222 6.0–17.0 RR6 13–37 — — — — —
Equity Equity Interests 0 0 RR6 0 — — — — —
Estimated Claims 295.9 — Recoveries 86.5–110.5 0 0 0 0 0
Emergence Date

DIP or Priority Priority Nontax Claim • Allowed priority nontax claims were paid in full.
Secured Secured Credit Facilities • Petition date borrowings of approximately $63 million were paid in full in cash prior to the disclosure statement
(Revolver and Term Loan Facility date.
and Supplemental Real Estate • The lenders were paid using a portion of the proceeds from the sale of all assets.
Facility) • The revolver and term loan facility was secured by a first lien on personal property and fee-owned interest in real
property and a second lien on leasehold interests in real property.
• The supplemental real estate facility was secured by a first lien on leasehold interests in real property.
Unsecured Convenience Claims • Paid one time distribution equal to 10% of claim amount.
• Claims limited to $5,000 maximum amount.
Unsecured Unsecured Claims • Allowed general unsecured claims received cumulative distributions of 8% of the holder's claim amounts through
June 29, 2012, as per the Distribution section of the Penn Traffic company web site.
• Payments to date were made in four distributions.
• The plan administrator anticipated that additional distributions to would follow after June 29, 2012, but such
payments were not assured.
Equity Equity Interests • Received no distributions.
• Equity interests were canceled and extinguished on the plan effective date.

Source, unless otherwise noted: Company disclosure statement in support of the second amended plan of reorganization dated Sept. 14, 2010.

September 28, 2016
Leveraged Finance

Cash on Filing Date Approximately $4 million (Source: schedules of assets and liabilities and statements of financial affairs of the
debtor).
Prepetition Bank Facility Commitments The company had a $136 million secured revolving and term loan facility and a $28 million supplemental real
estate facility.
Prepetition Bank Facility Borrowings on Filing Date $41.8 million of borrowings under the revolving and term loan facility and $10 million of borrowings under the
supplemental real estate facility.
Was the DIP a New Money Facility or Roll Up of a There was no DIP facility. The company used cash collateral for its liquidity needs during bankruptcy.
Executory Contracts Union contracts were renegotiated as part of the sales transactions to Tops.
Deficiency Claims No secured lenders were paid in full.
Contingent Claims Disputed claims
Intercompany Claims All intercompany loans among the debtors had been canceled and forgiven twice before in the prior Chapter 11
reorganizations, and were not determined in connection with the debtors’ Chapter 11 cases. There was a
substantive consolidation of all the debtors.
Pension Claims/Motions The defined benefit plans were terminated effective as of Jan. 25, 2010. The PBGC is now statutory trustee of
the plans. The debtors have joint and several liability with regard to the terminated plans.
Recipient Convenience claims.
DIP – Debtor in possession. PBGC – Pensions Benefit Guaranty Corporation.
Source: Fitch Ratings, company disclosure statement dated Sept. 14, 2010.

September 28, 2016
Leveraged Finance
Quiksilver, Inc.

Subsector Apparel Designer, Manufacturer and Retailer Key Driver Untenable Capital Structure
Prepetition Ticker Symbol ZSK
Emergence Parent Company Quiksilver/Privately Held 12-Month Period Amount
b
Name/Ticker Prepetition EBITDA FYE 10/31/14 (12)
Post-Emergence EBITDA Forecast 2017 65
Bankruptcy Summary
a
Petition Date 9/9/15 Equity Value Rangec
Postconfirmation Liquidating Trust No Total Debtd 898 356
Resolution Emerged/Reorganized (Private) Consolidated Leverage (x) (74.8) 5.5

Operational inefficiencies, unprofitable brands and looming debt maturities were key reasons for the filing. Quiksilver initiated a profit improvement plan in May of 2013 to
focus on three core brands, globalize certain key functions and improve operational efficiencies. Previously, the organization was decentralized in three distinct
geographical segments: Americas, EMEA and APAC. This created regional brand inefficiencies and limited cost advantages from the global scale of operations. The
restructuring efforts included the sales of certain underperforming brands (EG Mervin Manufacturing, a snowboard company, for $58 million in November 2013) and
exited unprofitable store locations when lease exit opportunities became available. Despite these efforts, there was a net loss reported in the first quarter of 2015. The
Los Angeles port dispute adversely affected operations and profits in early 2015, several senior management changes were made and liquidity became tighter.
A strategic review committee was formed, and outside financial professionals were engaged to explore a global refinancing of the debt and address the maturities of the
$200 million euro notes in December 2015. The company decided to close 27 unprofitable stores in August 2015 and liquidate the inventory in these stores in pop-up
store locations with a liquidation agent. As other financing was unavailable, a bankruptcy restructuring agreement was then negotiated with Oaktree that would replace
the ABL with a DIP, raise new funding and convert the secured notes into a majority of the new equity.

Valuation Based on Going Concern Reorganization
The third-party valuation advisor estimated a going concern valuation midpoint of $546 million for the bankrupt U.S. entities. This excludes the value of the nondebtor
European affiliates. Nondebtor subsidiaries outside the U.S. had a value estimate of $370 million and a net debt balance of $260 million, implying a residual parent
equity value of $110 million. Unencumbered equity value was about $39 million.
The U.S. valuation estimate was based on several methods, including a discounted cash flow analysis, a comparable company analysis and a precedent transaction
analysis. Specific rate assumptions and peer names were not provided. Company projections, including the below EBITDA were relied on in the estimate. A store
closing/liquidation agreement was entered with Gordon Brothers Retail Partners as agent, QS Retail and Hilco Merchant Resources on Sept. 4, 2015 for 27 retail stores
(total chain included 266 full-price core brand stores globally plus 147 factory stores). The agents set up pop-up stores to liquidate the inventory from the 27 stores. The
proceeds were not available.
The reorganization plan was premised on a $115 million–$127 million rights offering for a controlling ownership portion of the new common stock and a $50 million euro
notes offering. Oaktree bailed out the company with this new money investment and enabled it to survive as a going concern. Funding for the plan consisted of a $140
million exit revolver, a $50 million exit term loan and the proceeds from the rights offering.
($ Mil.) 2016 2017 2018
Pro Forma EBITDA 31.6 65.0 99.9

The Chapter 7 alternative hypothetical liquidation valuation estimated a liquidation value in the range of $180 million–$219 million. The analysis assumed a liquidation of
the assets would be completed over 12 months, with completion of going-out-of-business inventory sales at all remaining stores during the first two months of the
process. The estimate was based on discounts to the total balance sheet book value of $322 million as of Jan. 31, 2016. Asset book values and estimated liquidation
value ranges included:
• Cash of $5 million at 100%
• Customer receivables of $64 million at $55 million–$61 million
• Inventory of $106 million at $72 million–$78 million
• IP/Trademarks of $54 million at $46 million–$72 million
a
European and Asia-Pacific operations were excluded from the filing. bSource of prepetition EBITDA is 10-K for FYE Oct. 31, 2014. cAssumes no euro notes exchange
offer; if the exchange offer was consummated, then value of stock would be $276 million. dExit debt includes $120 million exit facility debt, $150 million euro notes
(estimate that is subject to exchange offer) and $48 million eurofactor agreement and line of credit borrowings that were unaffected by the Chapter 11 filing.
Source, unless otherwise noted: Second amended disclosure statement dated Dec. 4, 2015.

September 28, 2016
Leveraged Finance
Quiksilver, Inc. (Continued)

Administrative/ DIP and Other 178 100.0 RR1 178 — — — — —
Priority
Secured $230 Million ABL Revolver 0 100.0 RR1 — — — — — —
$280 Million 7.875% First Lien
Secured Senior Secured Notes due 2018 282 17.0 RR5 — — — — 31 —
$222.8 Million 10% Senior Notes
Unsecured due 2020 229 3.6 RR6 8 — — — — —
Unsecured General Unsecured Claims ~50 3.6 RR6 2 — — — — —
Unsecured $221 Million 8.875% Senior Euro 260 100.0 RR1 — — 260 — — —
Notes due 2017 and Eurofactor
Agreement and Lines Totaling
$32 Million
Equity Old Equity Interests N.A. 0.0 RR6 — — — — — —

Administrative/ DIP and Other • Included ABL and term loan tranches of DIP plus $8 million of estimated administrative claims.
Priority • DIP was paid in full in cash with proceeds of the $140 million ABL exit facility and/or with funds from the rights
offering for a portion of the new equity shares.
• DIP carried an interest rate of 12%.
Secured $230 Million ABL Revolver • Prepetition borrowings of $92 million under the ABL were repaid in cash prior to emergence or converted into
a $60 million DIP and remained outstanding as DIP revolver borrowings until paid in cash on emergence.
• Facility consisted of $160 million of commitments to domestic borrowers and $70 million of commitments to
foreign borrowers.
Secured $280 Million 7.875% First Lien • 73% of the notes were held by Oaktree Capital Management, which was the plan equity sponsor and the
Senior Secured Notes due 2018 provider of the DIP along with Bank of America.
• Holders received 22% of new common stock and subscription rights for common stock.
• Certain holders have the right to exercise subscription rights for the purchase of up to $115 million of new
common stock, which was 74% of the new shares assuming the Euro notes exchange offer was not
consummated. Rights offering proceeds were used to fund distributions under the plan and provide working
capital after emergence.
• Claim amount included $2.3 million of accrued prepetition interest.
Unsecured $222.8 Million 10% Senior Notes • Split $10 million cash distribution pro rata with general unsecured creditors; share is Fitch estimate as
due 2020 general unsecured claim amount was not available.
• Eligible holders have right to purchase subscription rights for up to $12.5 million of new common stock.
Unsecured General Unsecured Claims • Split $10 million cash distribution pro rata with 10% noteholders; share is Fitch estimate as general
unsecured claim amount was not available.
Unsecured $221 Million 8.875% Senior Euro • The $221 million of euro notes, the $32 million of debt under the eurofactor agreement and French bank line
Notes due 2017 and Eurofactor of credit borrowings were reinstated.
Agreement and Lines Totaling • This debt was issued at nondebtors and was unaffected by the bankruptcy.
$32 Million
Equity Old Equity Interests • $0 recovery.
a
New ABL had maximum of $140 million or borrowing base; actual exit usage not available. RR – Recovery Rating. DIP – Debtor in possession.
ABL – Asset-based loan. N.A. – Not available.
Source, unless otherwise noted: Second amended disclosure statement dated Dec. 4, 2015.

September 28, 2016
Leveraged Finance
Quiksilver, Inc. (Continued)

Cash on Filing Date $9.1 million per monthly operating report filed as 8-K on Nov. 30, 2015 for period Sept. 9, 2015 to Oct. 31, 2015.
Prepetition Bank Facility Commitments $230 million ABL facility and $32 million under various bilateral European credit lines.
Prepetition Bank Facility Borrowings on Filing Date $92 million of ABL borrowings and $32 million of European credit line loans.
Was the DIP a New Money Facility or Roll Up of a There were two DIPs, an ABL and a term loan. The ABL DIP was a roll up of the prepetition ABL facility
Prepetition Facility? borrowings.
Other Notable Issues The plan was premised on an approximately $127.5 million rights offering for a portion of the new common stock
and a $50 million euro notes offering. Oaktree made this new money investment and facilitated survival as a
going concern. Funding for the plan consisted of a $140 million exit revolver, a $50 million exit term loan and the
proceeds from the rights offering.
Executory Contracts As going-out-of-business sales were completed, the company rejected those store leases.
Deficiency Claims Yes, holders of secured notes had deficiency claims, but waived them.
Contingent Claims and/or Contingent Recoveries Contingent claims included claims subject to liquidation pursuant to litigation.
Intercompany Claims Reinstated, released or discharged at the company’s election.
Pension Claims/Motions None. The company had a 401(k) plan and had no defined-benefit pension program. The company suspended
matching contributions in 2015.
If Yes, Recipient Class ABL lenders.
Recipient and Comments Unsecured notes and general unsecured claims shared $10 million.


September 28, 2016
Leveraged Finance
RadioShack Corporation

Subsector Consumer Electronics Key Driver Untenable Capital Structure
Prepetition Ticker Symbol RSH
Emergence Parent Company RS Legacy Corp. 12-Month Period Amount
Name/Ticker Prepetition EBITDA 11/1/14 (300)
Post-Emergence EBITDA Forecast Not Applicable —
Bankruptcy Summary
Duration (Months) 8 Midpoint EV/Post-Emergence EBITDA Estimate Not Available
Filing — Type Chapter 11 (Prepackaged)
(as Liquidation) Petition Date Versus Emergence Date
Resolution Liquidation (Under Chapter 11) Consolidated Leverage (x) (2.8) Not Available

In the years prior to its bankruptcy, RadioShack experienced significant sales declines due to increased competition from a variety of players. First, the rise of discount retailers
heightened pricing competition across many retail sectors, yielding financial distress for once-strong players (including a 2008 bankruptcy and liquidation by one-time consumer
electronics leader Circuit City). The more recent rise of e-commerce players such as Amazon caused further pricing competition and, given online retail’s “endless aisle”
characteristics, competition with RadioShack’s inventory breadth and availability. Finally, over time RadioShack became more reliant on sales from cell phones and accessories,
and lost share as the major carriers began opening their own locations in direct competition. A succession of management teams was unable to reverse the company’s negative
sales trend with new marketing campaigns and store refreshes. As a result of declining sales and profitability, the company began several rounds of cost reductions, store closures
and debt reduction. In 2014, the company was unable to negotiate lender consent for its plans to close up to 1,100 of its approximately 4,300 stores, stalling RadioShack’s cost
reduction program. Vendors began tightening terms with the company, making it more difficult for RadioShack to stock its stores with inventory. Lower inventory levels reduced the
company’s borrowing base on its credit facility, limiting its borrowing capacity. Sales declined steeply in 2014, leading to a delisting from the New York Stock Exchange and a notice
from its term loan lender Salus Capital Partners alleging a covenant breach. In January of 2015, Salus Capital Partners notified RadioShack that it defaulted on its second-lien credit
agreement, and RadioShack declared Chapter 11 bankruptcy on Feb. 5, 2015.

Rough Fitch Estimate of Liquidation Proceeds Established Value
Estimate of
Asset Proceeds ($ Mil.) Notes
Initial Store Closing Sale 100 Rough Fitch estimate, actual proceeds not available. Consulting agreements for 1,754 store closing sales with Hilco
Merchant Resources LLC, Gordon Brothers Retail Partners LLC and Tiger Capital Group LLC were authorized to be
assumed by the company on Feb. 6, 2015 and Feb. 20, 2015 and set out liquidation sale terms for about half the
chain.
The Going Concern and Other Sales 150 General Wireless, an entity formed by Standard General, made a stalking horse bid to purchase more than 1,700
store leases, the inventory and fixtures at these stores, and certain other assets with the intent to either operate as a
going concern or liquidate. This was a credit bid, which included the bid of certain DIP lenders. The bankruptcy court
approved this sale to General Wireless on April, 1, 2015 and it closed that day.
Mexican Store Assets 32 Office Depot de Mexico, S.A. de C.V. was the successful bidder.
Latin America Intellectual Property 5 Purchased by Regal Forest Holding Co., Ltd. Buyer also assumed certain liabilities.
Middle East Intellectual Property and 2 Purchased by Delta RS for Trading and KPI Concepts International, respectively.
Antenna Craft Asst.
Termination of in the Money Leases 3 Sales and termination of leases generated more than $3 million for the debtor’s estate.
IP Assets including Franchise, 26 Purchased by General Wireless in May 2015.
Network and Customer Lists
Real Property Sales 50 Included properties in Texas and California.
AT&T Wireless Settlement Proceeds 5.5 In addition to the $5.5 million termination fee, the settlement provided that AT&T would purchase up to $10.5 million
of inventory from the debtors.
Sprint Settlement Proceeds 20 Sprint agreed to pay $20 million to terminate the retailer distribution agreement with RadioShack.
Total Liquidation Proceeds 392.8

A liquidation under Chapter 7 would have resulted in lower recoveries for claims as a result of the forced sale and trustee costs associated with such a process.
Source, unless otherwise noted: Joint disclosure statement of RS Legacy Corporation and affiliates dated Aug. 12, 2015.
September 28, 2016
Leveraged Finance
RadioShack Corporation (Continued)

DIP and Priority DIP, Priority and Administrative 30 100.0 RR1 30 — — — — —
Secured ABL Loans and Letters of Credit 250 100.0 RR1 250 — — — — —
Secured Second-Lien Term Loan Facility 146 39.7 RR4 58 — — — — —
Unsecured $325 Million 6.75% Senior Unsecured 330 <2.0 RR6 6 — — — — —
Notes due May 2019
Unsecured General Unsecured Claims 200–400 <2.0 RR6 6 — — — — —
Unsecured IRS Claims 0–128 N.A. N.A. N.A. — — — — —
Equity Equity Interests 0 0.0 RR6 — — — — — —
Estimated Claims >1,000 — Recoveries 350 0 0 0 0 0

DIP and Priority DIP, Priority and Administrative • Claim estimate amount includes new money portion of DIP facility loans. Claims may also have included roll
up amounts of the prepetition ABL facility which are shown below.
Secured ABL Loans and Letters of Credit • The prepetition ABL claims were paid in full with proceeds of the DIP facility or pursuant to the terms of the
General Wireless going concern sale order.
Secured Second-Lien Term Loan Facility • Holders waived their deficiency claims.
• Secured by a first lien on PP&E and fixtures and a second lien on working capital assets.
• The $250 million claim amount represents the amount outstanding on the petition date; approximately
$100 million was paid to one lender, Cerberus, using postpetition cash flow leaving principal of $150 million.
• Principal was further reduced to $146 million because postpetition interest was applied to the principal.
• Fitch calculated the recovery based on repayment of the remaining $146 million as of the petition date.
Unsecured $325 Million 6.75% Senior Unsecured • Distributions are largely dependent on causes of action.
Notes due May 2019 • Holders received distributions in cash with remaining proceeds of the liquidating trust assets plus certain
additional distributions.
• Not entitled to distributions using encumbered cash.
Unsecured General Unsecured Claims • Distributions are largely dependent on causes of action.
• As of the retail month ending December 2014, the debtors owed approximately $124 million for merchandise,
goods and services.
Unsecured IRS Claims • Allowed claim amount and distributions subject to negotiation.
Equity Equity Interests • No distributions.
RR – Recovery rating. DIP – Debtor in possession. ABL – Asset-based loan. N.A. – Not available.
Source, unless otherwise noted: Joint disclosure statement of RS Legacy Corporation and affiliates dated Aug. 12, 2015.
Bond Price History — RadioShack Corporation

($330 Million 6.75% Unsecured Notes Due 2019)
(% of Par)
70
60 Filing Date: 02/15/15
50
40
30
Confirmation Date: 10/2/15
20
10
0
Source: Bloomberg, FitchRatings.

September 28, 2016
Leveraged Finance
RadioShack Corporation (Continued)

Prepetition Bank Facility Commitments 2013 ABL credit agreement had a $275 million term loan, $120 million letter of credit facility and $140 million
revolving credit facility. In addition, there was a $250 million second-lien term loan.
Prepetition Bank Facility Borrowings on Filing Date $140 million outstanding loans and $110 million of letters of credit under the 2013 ABL credit agreement and
$250 million second-lien term loan.
Was the DIP a New Money Facility or Roll Up of a The $285.3 million DIP facility was partially a roll up of up to $250 million of loans and letters of credit
Prepetition Facility? outstanding under the 2013 ABL credit agreement and partially a new money facility.
Other Notable Issues Salus Capital Partners (SCP), the second-lien lender, commenced an adversary proceeding on March 17, 2015
relating to intercreditor issues with the ABL lenders. This was pending as of the disclosure statement date.
Over the course of the bankruptcy, the company filed more than 20 separate motions to reject hundreds of
Executory Contracts executory contracts and unexpired leases that were no longer necessary.
Deficiency Claims SCP secured claimholders had deficiency claims, but chose to waive them.
Contingent Claims and/or Contingent Recoveries Unsecured noteholders and other unsecured holders have contingent recoveries from causes of action and
vendor debit collections. Causes of action include adversary proceedings in which several states filed to have
unused gift cards classified as priority rather than unsecured claims. Disputed claims include contingent claims.
Intercompany Claims No distributions made or reserved for intercompany claims.
Pension Claims/Motions No
Recipient and Comments Unsecured claims including 6.75% notes, trade and other general unsecured claims.
Source: Fitch Ratings, disclosure statement dated Aug. 12, 2015.

September 28, 2016
Leveraged Finance
Syms Corp., Filene’s Basement, LLC, Syms Clothing, Inc., Syms Advertising Inc.

Subsector Family Clothing Stores Key Driver Deep Cyclical Trough
Prepetition Ticker Symbol SYMS
Petition Date Assets 270.8
Emergence Parent Company Name/Ticker Trinity Place Holdings Inc./TPHS
Financial Profile
Bankruptcy Summary Post-Emergence EBITDA Forecast Not Applicable
Court District Wilmington, DE
High 172
Substantive Consolidation Certain Classes
Filing — Type Chapter 11 Midpoint EV/Post-Emergence EBITDA Estimate Not Applicable
Resolution Emerged/Reorganized (Public) Petition Date Emergence Date
Total Debt 20.2a 0
Consolidated Leverage (x) (0.8) Not Applicable
Debt Shed in Bankruptcy — 20.2

Syms Corp. (Syms), Filene’s Basement, LLC (Filene’s), Syms Clothing, Inc., and Syms Advertising Inc., collectively the “company,” experienced significant operational
losses prior to the petition date. The company had consolidated operating losses before taxes of $51.7 million in fiscal year ending February 2011 and $67 million in the
quarter ending October 2011. Historically, Syms had experienced pretax operating losses beginning in the fiscal year ending February 2009.
The company’s deteriorating financial situation was due to the loss of customers during the prolonged recession and because of the previous Filene’s Basement, Inc.’s
(Filene’s Basement) bankruptcy, unrealized synergies that were expected from the acquisition of Filene’s Basement in June 2009, and intense competition in the retail
apparel sector. During the recession, consumers’ discretionary spending was reduced and consumers were buying less often and fewer items of merchandise sold by
the company. Many customers were also lost due to the Filene’s Basement’s bankruptcy, and the company was not able to recapture them after the June 2009
acquisition. Further, Syms had hoped to achieve significant synergies and cost reductions through the 2009 acquisition of Filene’s, but the benefits were not
subsequently realized. Finally, competition continued to increase from discount stores, specialty apparel stores, factory outlet stores, and others that had greater
resources and buying power than the company.
Marcy Syms and affiliates, collectively the “Majority Shareholders,” held approximately 54.4% of all outstanding Syms common stock. The Majority Shareholders agreed
to sell all their shares to Syms for $2.49 per share, or $19.6 million in total. Pursuant to the plan, they are to receive 40% of the proceeds from dispositions, until they
receive $10.7 million. After all other creditors are paid according to the plan, the remaining amount of $7.1 million is to be paid to the Majority Shareholders. This
represents the remaining balance due after netting out amounts regarding Marcy Syms’ split-dollar life insurance policy.
Syms offered to sell 10 million new shares to “accredited investors” for $2.49 per share, or approximately $25 million. This increased the number of shares outstanding
to 16.6 million, from 14.4 million, and represents a dilution of 13.1% to prepetition owners who do not purchase shares in the rights offering. The offering also represents
a net $5.4 million in new equity proceeds.

Fitch Estimate of Enterprise Value Based on Sum of Claimholder Distribution Amounts
The Enterprise Value Estimate of $172 million reflects Fitch’s estimate based on the sum of planned distributions to allowed claims. The total amount of $167 million in
planned distributions from both Syms and Filene’s to all creditors was added to the $5.4 million in net new equity proceeds to calculate the enterprise value. Syms has a
total of $104 million of planned distributions, while Filene’s has a total of $63 million. Amounts paid on the secured revolving credit facility were allocated $15 million to
Filene’s and the remainder to Syms, as Syms and Filene’s were joint obligors. Filene’s creditors would have received $15 million from Syms if the amounts outstanding
were paid fully from Syms, and not allocated on the basis of store liquidation proceeds. All of the planned distribution to the company’s Union Pension Plan was
allocated to Syms, as the Local 1102 Retirement Trust filed the $6.4 million claim against Syms. All intercompany claims were settled and not included in the EV
estimate.
To maximize postpetition value, Syms decided to sell the entire real estate portfolio over time, in a non-distressed, commercially reasonable manner. First, 13 noncore
properties will be sold on an “as is” basis, and proceeds are expected to be $55 million–$65 million. Second, the value of three properties is to be enhanced through a
marketing strategy that targets a lease-up and sale/refinance strategy over the first 24–30 months. Last, Syms will pursue a joint venture partnership to enhance the
value of its Trinity Property in New York. The site is expected to be developed into a mixed-use residential property within four years. Syms estimates that the realizable
value of all owned real estate is approximately $147 million. While the company reorganized, it ceased operating as a retailer and emerged as a real estate company for
the purpose of selling the properties.
a
Does not include $11.1 million in letters of credit.
Source, unless otherwise noted: Disclosure statement dated July 13, 2012.

September 28, 2016
Leveraged Finance
Syms Corp., Filene’s Basement, LLC, Syms Clothing, Inc., Syms Advertising Inc. (Continued)
Secured $75 Million Senior Secured 0 100.0 RR1 — — — — — —
Revolving Credit Facility
DIP or Other Administrative, Superpriority 31 100.0 RR1 31 — — — — —
Administrative Intercompany Claims and
Priority Tax Claims
Unsecured Unsecured Claims Against 54 100.0 RR1 54 — — — — —
Syms
Unsecured Short-Term Unsecured Claims 9 100.0 RR1 9 — — — — —
Against Filene’s
Unsecured Long-Term Unsecured Claims 37 75.0 RR2 28 — — — — —
Against Filene’s
Unsecured Union Pension Plan Claims 6 100.0 RR1 6 — — — — —
Intercompany Intercompany Claims 0 0.0 RR6 0 — — — — —
New Borrowings at Emergence 0 —— — — — — — —
Emergence Date 0 —— — — — — — —

Secured $75 Million Senior Secured • Petition date borrowings and letters of credit of approximately $31.3 million fully repaid in cash from store
Revolving Credit Facility liquidation sales.
• Syms and Filene’s were joint borrowers under the credit agreement with Bank of America, N.A. (BoA), and the
administrative and collateral agent.
• Secured by liens on respective inventory and other personal property, and two parcels of real estate owned by
Syms in New Jersey.
DIP or Other Administrative, Superpriority • Administrative claims include: claims for the value of any goods shipped within 20 days of petition date, claims for
Administrative Intercompany Claims and goods and services provided after the petition date including landlords, utility providers, and professionals.
Priority Tax Claims • Superpriority intercompany claims and priority tax claims were settled according to the plan.
Unsecured Unsecured Claims Against • Includes unpaid trade payables, lease rejection damages, employee severance claims, and other unsecured
Syms claims, including trade and lease claims against Filene’s that was guaranteed by Syms.
Unsecured Short-Term Unsecured Claims • Includes unpaid trade payables and employee severance claims.
Against Filene’s • Under the plan, holders of these claims are to receive 100% recovery in cash over time, having agreed to
relinquish any claims they believe to have against Syms.
Unsecured Long-Term Unsecured Claims • Includes claims for rejection of executory contracts and unexpired leases. Under the plan, holders of these claims
Against Filene’s are to receive 75% recovery in cash over time, and agreed to relinquish any claims they believe they have
against Syms.
Unsecured Union Pension Plan Claims • Claims filed by Local 1102 Retirement Trust against Syms on account of multi-employer pension plan withdrawal
liability. To be fully paid in quarterly payments beginning February 2013 with portions being paid before such
date.
Intercompany Intercompany Claims • All intercompany claims cancelled pursuant to the plan.
Source, unless otherwise noted: Disclosure statement dated July 13, 2012.

September 28, 2016
Leveraged Finance
Syms Corp., Filene’s Basement, LLC, Syms Clothing, Inc., Syms Advertising Inc. (Continued)
Cash as of Nov. 26, 2011 $45 million.
Prepetition Bank Facility Commitments $75 senior secured revolving credit facility.
Prepetition Bank Facility Borrowings on Filing Date Approximately $31.3 million including borrowings and letters of credit. This was paid in full.
Was the DIP a New Money Facility or Roll Up of a Prepetition facility paid in full. No new debt borrowed postpetition.
Disclosure or Estimate of Total Administrative and Priority $33.4 million.
Claims for Entire Period of Bankruptcy Proceeding?
If Yes, Admin. + Priority as % of Enterprise Value? 19%
Executory Contracts Lease rejections claims totaled $4.6 million directly against Syms, and $14.6 million in claims against
Filene’s guaranteed by Syms. These claims were fully paid as unsecured claims against Syms. Lease
rejection claims against Filene’s totaled $36.8 million and were paid 75% according to the plan as long-term
unsecured claims against Filene’s.
Contingent Claims To be paid with proceeds of asset disposition to the extent allowed.
Intercompany Claims Intercompany claims were canceled.
Pension Claims/Motions Voluntarily terminated on the effective date. Withdrawal liability of $6.4 million to be paid in full over time.
Recipient Short-term unsecured claims against Filene’s and Union pension plan claims.
Source: Fitch Ratings, company disclosure statement dated July 13, 2012.

September 28, 2016
Leveraged Finance
Value City Holdings, Inc.

($ Mil., Except Where Noted

Subsector Department Stores Key Driver Deep Cyclical Trough
Prepetition EBITDA — Privately Held,
Bankruptcy Summary Undisclosed
Post-Emergence EBITDA Forecast — N.A., Liquidated
Enterprise Value (EV) Range (or Asset Value Range)a
Low 41
Court District Southern District of New York
High 41
Equity Value Range
Low 0
High 0
Midpoint EV/Post-Emergence EBITDA Estimate (x) N.A.
Assets (as Liquidation)
Consolidated Leverage (x) N.A. N.A.

Value City (formerly a wholly owned subsidiary of Retail Ventures, Inc. before the sale of 81% of an interest to VCHI Acquisition Co. in January 2008) experienced
declining sales and profitability over the several years prior to its Chapter 11 filing, despite its former parent’s cost reduction efforts via operational and financial
restructuring (including a series of going-out-of-business sales and elimination of intercompany debt). The undifferentiated merchandise assortment and presentation led
to its weakening competitive position in light of increased competition in the discount retail market. In addition, Value City’s high cost structure (SG&A expenses
accounted for more than 40% of sales prior to petition versus midteen to 30% among strong off-price competitors and large department stores) constrained its
profitability and free cash flow generation. The operating losses weakened the company’s liquidity position.
The economic downturn in 2008 and tightening of credit markets exacerbated the company’s strained liquidity position. Several months prior to the petition, Value City
sought to obtain additional financing from its asset-based credit facility (increase to $90 million from $75 million) to enhance liquidity, while tightened trade credit and,
therefore, the inability to obtain merchandise before the crucial holiday selling season in 2008 constrained the availability under the revolver. The company continued to
close selected stores through 2008, while revamping and reorganizing the merchandise approach in those which were retained. The deepening recession and decline in
consumer discretionary spending in fourth-quarter 2008 created challenges. The vendors began tightening terms and the company had difficulties getting sufficient
inventory. The company violated terms of a forbearance agreement with prepetition lenders in October 2008, and this led to further loss of liquidity to support its
merchandise purchases, which finally drove the company into Chapter 11 bankruptcy. There was a chain-wide liquidation in bankruptcy.

Fitch Estimate of Liquidation Value Based on Sum of Distributions to Claimholders
All of Value City’s inventory and other tangible assets in its remaining 66 stores were liquidated by Dec. 27, 2008, with total proceeds estimated by Fitch of
$41 million based on sum of claimholder distribution amounts and remaining estimated proceeds from the sales. Prior to the petition date, the company retained Tiger
Capital, a nationally recognized liquidator, to conduct going out of business sales in its remaining stores. The company applied cash on hand and cash from liquidation
sales to fully repay the borrowings under its DIP facility (estimated at $26 million as the roll-up amount from the prepetition credit facility) and cash collateral for the
prepetition letters of credit of $10.5 million. The estimated proceeds are net of the operating costs and professional fees through the bankruptcy process. Fitch estimates
the general unsecured claims received very poor recovery given limited cash remaining for distributions.
Compared to Chapter 11, a Chapter 7 liquidation would have resulted in lower recoveries for creditors due to associated trustee fees.
a
Fitch estimate based on liquidation proceeds. N.A. – Not applicable. DIP – Debtor in possession. SG&A – Selling, general and administrative.
Source, unless otherwise noted: Company disclosure statement dated March 18, 2010.

September 28, 2016
Leveraged Finance
Value City Holdings, Inc. (Continued)

DIP or Other $40 Million DIP Claims and 0 100.0 RR1 34 — — — — —
Administrative Administrative Expenses/Fee
Claims
Secured Priority Nontax Claims 4.7 100.0 RR1 4.7 — — — — —
Secured Prepetition Asset-Backed Revolver 0 100.0 RR1 0 — — — — —
(Rolled into DIP)
Unsecured General Unsecured Claims 133 <10 RR6 3 — — — — —
Unsecured VCHI Acquisition General 0 100.0 RR1 — — — — — —
Unsecured Claims
Equity Operating Debtors’ Equity Interests N.A. 0 RR6 — — — — — —
Equity VCHI Acquisition Equity Interests N.A. 0 N.A. — — — — — —
Emergence Date

DIP or Other $40 Million DIP Claims and • DIP borrowings, including borrowings to roll up $26 million prepetition revolver balance and $4.8 million
Administrative Administrative Expenses/Fee letters of credit (L/C) issued under the prepetition facility (original prepetition L/C net of $5.7 million released
Claims cash collateral), were reduced to $0 by Dec. 1, 2010.
• Repaid in full with liquidation proceeds prior to the disclosure statement date.
• Administrative expenses consisted of Bank of America (BofA) Master Agreement with $0 claims, $3.3 million
administrative expense claims,
$1.3 million fee claims and $0.9 million priority tax claims remaining as of the disclosure statement date.
• The BofA Master Agreement was put in place in July 2009 to substitute the prepetition L/Cs (securing
workers’ compensation) after the DIP lenders refused to renew the prepetition L/Cs and the bankruptcy court
entered an order to terminate the prepetition credit agreement and DIP facility. The replacement L/Cs were
fully cash collateralized. The company reached a settlement to reduce its L/C and release the remaining cash
collateral of $5.7 million, which was used to fund the distributions under the plan of reorganization.
Secured Priority Nontax Claims • Unimpaired and deemed to accept the plan.
Secured Prepetition Asset Backed Revolver • The petition date borrowings under the ABL facility were repaid in full with DIP loan borrowings shortly after
(Rolled into DIP) the petition date.
• The prepetition ABL facility was subsequently canceled.
Unsecured General Unsecured Claims • Included claims relating to contingent environmental liabilities, lease rejection claims, and any deficiency
claims.
• Distributions were made from cash in the claims distribution fund.
• Very poor recoveries assumed by Fitch based on cash balance of $9 million as of the first monthly operating
report postconfirmation dated July 3, 2010, which would be distributed to unsecured creditors, remaining
legal and professional costs and trustee fees, postconfirmation payroll, etc.
Unsecured VCHI Acquisition General • Estimated claim amount of $0.
Unsecured Claims • Holders of VCHI Acquisition general unsecured claims were conclusively presumed to accept the plan of
reorganization, and the votes of such holders were not solicited with respect to such VCHI Acquisition
general unsecured claims.
• Unimpaired and deemed to accept the plan.
Equity Operating Debtors’ Equity Interests • Holders received no distributions and deemed to have rejected the plan.
Equity VCHI Acquisition Equity Interests • Holders retained their interests in VCHI Acquisition Co. and were entitled to the residual value of VCHI
Acquisition Co., following satisfaction in full of any allowed VCHI Acquisition general unsecured claims.
Source, unless otherwise noted: Company disclosure statement dated March 18, 2010.

September 28, 2016
Leveraged Finance
Value City Holdings, Inc. (Continued)

Cash on Filing Date Not disclosed. There was cash on hand of $12 million as of Nov. 1, 2008, according to the Monthly Operating
Report for the period ending Nov. 29, 2008.
Prepetition Bank Facility Commitments Prepetition credit agreement included a) $75 million asset-based revolving credit facility with a borrowing base
tied to certain credit card receivables and eligible inventory, and b) $20 million letters of credit.
Prepetition Bank Facility Borrowings on Filing Date $26 million outstanding under the $75 million prepetition asset based revolver and $10.5 million issued under
the prepetition letter of credit facility.
Was the DIP a New Money Facility or Roll Up of a The DIP was a roll-up facility.
Executory Contracts Certain of the store leases were assumed and assigned to third parties and the remainder were rejected.
Deficiency Claims Not disclosed.
Contingent Claims A reserve was established for disputed claims.
Intercompany Claims All intercompany claims were eliminated as a result of the substantive consolidation.
Pension Claims/Motions Pension plans were terminated effective May 31, 2009 in distress terminations. PBGC filed claims for the
unfunded portions and reached a settlement with the company in January 2010. The PBGC received an
allowed administrative expense claim in the amount of $2.5 million. All other claims of the PBGC subject to the
agreed order were reclassified as general unsecured claims and totaled approximately $5.7 million as per the
confirmation order.
Source: Fitch Ratings, company disclosure statement dated March 18, 2010.

September 28, 2016
Leveraged Finance
The Wet Seal, Inc.


Subsector Fast Fashion Apparel for Teen Girls and Young Women Key Driver Untenable Capital Structure
Prepetition Ticker Symbol WTSL
Emergence Parent Company Seal 123, Inc./Not Applicable 12-Month Period Amount
Name/Ticker Prepetition EBITDA FY 2014 (33)
Post-Emergence EBITDA Forecast — Not Applicable
Bankruptcy Summary
Plan Proposed by Joint Plan of Debtor and Creditor Low 30
Resolution Section 363 Sale and Liquidating Plan Consolidated Leverage (x) (0.8) Not Applicable

The teen-focused fashion chain experienced increasing competition from fast fashion chains like H&M, Walmart and other big box chains, and a move towards online
retailers such as Amazon and away from mall-based stores. The clothing line was not compelling. In addition, the company cited a growing tendency among teens to
spend their disposable income on technology products, such as smart phones, rather than fashion. These challenges caused declining same-store sales, operating
losses and executive turnover in the years leading up to bankruptcy. Store closings, including the company’s Arden B chain, and other restructuring efforts were made in
2013. The company hired a restructuring advisor and attempted to obtain lease concessions to avoid bankruptcy, but was unable to get sufficient lease concessions to
sustain operations. The company defaulted on $27 million of convertible notes in December 2014. One week prior to filing, the company announced it would close
338 stores, or about two-thirds of its chain.

Partial Sale as a Going Concern and Partial Closure of Stores Prior and After the Filing Date
Mador Lending, LLC, an affiliate of Versa Capital Management, LLC, acquired 173 stores for $7.5 million cash plus a credit bid for the $20 million of DIP debt
outstanding and the assumption of certain assumed liabilities. The assumed liabilities included certain contracts, permits, all trade payables and accrued expenses and
all employee benefit plans, gift card obligations. The section 363 sale of operating stores closed on April 15, 2015 and was the result of Mador winning an auction for the
company’s operating assets on March 10, 2015. Just prior to filing, 338 stores were permanently closed, and the other stores were sold as a going concern in the
bankruptcy auction. Wet Seal had approximately $31 million of cash on hand at the time of filing. The valuation range is a rough Fitch estimate based on the cash on
hand at filing plus the value of the acquired assets.
There was no fundamental liquidation valuation provided in the disclosure statement. Prior to filing, a majority of the stores had been closed.
FY – Fiscal year. DIP – Debtor in possession.

Source, unless otherwise noted: First amended disclosure statement for the joint plan of liquidation dated Aug. 10, 2015.

September 28, 2016
Leveraged Finance
The Wet Seal, Inc. (Continued)

DIP and Priority Priority Claims and $20 Million DIP 25 100.0 RR1 5 — — — 20 —
Secured $35 Million First-Lien Senior 2 100.0 RR1 2 — — — — —
Secured Revolver
Secured Other Secured Claims Not Available 100.0 RR1 — — — — — —
Unsecured Assumed General Unsecured Not Available 100.0 RR1 — — — — — —
Claims
Unsecured $24.9 Million Senior Convertible 29 0.0 RR6 — — — — — —
Notes
Equity Equity Interests — 0.0 RR6 — — — — — —
Estimated Claims 56 Recoveries 12 0 0 0 20 0

DIP and Priority Priority Claims and $20 Million DIP • There were two DIPs, a loan facility and a letter of credit facility. The original loan facility DIP lender was
provided by B. Riley and provided for up to $20 million of borrowings with the debt to convert to the new
equity.
• The debtors filed a motion for Mador, the successful bidder at the auction of all remaining assets on
March 13, 2015, to become the replacement DIP loan lender, with the DIP to convert to new equity.
• Mador’s bid for the assets included a credit bid of all of the DIP facility obligations and cash.
• Fitch assumes the loan DIP was fully drawn for purposes of the claim and distribution amounts, and the cash-
collateralized letters of credit facility was continued until the letters expire with no related claims.
Secured $35 Million First-Lien Senior • Unimpaired, paid in cash.
Secured Revolver • Deemed to have accepted the plan of reorganization.
Secured Other Secured Claims • Unimpaired, paid in cash.
• Deemed to have accepted the plan of reorganization.
Unsecured Assumed General Unsecured • Paid in full by Mador, the acquirer of operating assets.
Claims • Included trade payables, employee benefits, assumed leases and certain other obligations.
Unsecured General Unsecured Claims • Included rejected leases and other non-assumed liabilities.
Unsecured $24.9 Million Senior Convertible • The senior convertible notes were originally issued to Hudson Bay Master Fund Ltd. and subsequently
Notes acquired by Rodam, LLC.
• The claimant agreed to subordinate its claims to the other allowed general unsecured claims and vote to
accept the plan with $0 recovery.
Equity Equity Interests • $0 recovery.

Source, unless otherwise noted: First amended disclosure statement for the joint plan of liquidation dated Aug. 10, 2015.

September 28, 2016
Leveraged Finance
The Wet Seal, Inc. (Continued)

Cash on Filing Date Roughly $31 million, per Associated Press article dated Jan. 16, 2015.
Prepetition Bank Facility Commitments $35 million revolving credit facility.
Prepetition Bank Facility Borrowings on Filing Date The only usage was $10.8 million of fully cash collateralized letters of credit. There were no loan borrowings
under the facility.
Was the DIP a New Money Facility or Roll Up of a The $20 million letter of credit DIP was used to roll up $10.8 million of prepetition letters of credit. It was
Prepetition Facility? provided by B. Riley Financial and Great American Group, the plan sponsors under the original proposal that
envisioned emergence as a going concern and conversion of the DIP debt into 80% of the new common stock.
This bid was raised to $25 million for the stock plus $5 million, but it did not proceed due to a higher, competing
bid from Mador Lending, LLC. Mador assumed the DIP.
Executory Contracts $19 million of general unsecured claims were held by lessors for non-residential real estate leases that were
rejected.
Contingent Claims and/or Contingent Recoveries There are disputed claims relating to employees in California that were laid off shortly prior to the petition date
that are asserting more than $5 million of WARN act claims.
Intercompany Claims The intercompany claims were eliminated as a result of the substantive consolidations. There were large
intercompany claims; for example 123 Retail was indebted to Seal 123 for $125.8 million, and 123 Catalog
owed Seal 123 $69.5 million.
Pension Claims/Motions None. All employee benefit plans were assumed by Mador.
If Yes, Recipient Class Secured letter of credit agreement.
Recipient and Comments Certain general unsecured claims. An unsecured creditor, Rodam LLC, which purchased $24.9 million of senior
convertible notes issued to Hudson Bay Master Fund Ltd., agreed to subordinate its $29 million general
unsecured claims to subordinated claim status and did not receive any distribution.
Source: Fitch Ratings, company disclosure statement for the first amended joint plan of liquidation dated Aug. 10, 2015.

September 28, 2016
Leveraged Finance
Winn-Dixie Stores, Inc.


Subsector Supermarket Chain Key Driver Flawed Business Model or Obsolete Product
Prepetition Ticker Symbol WIN
Emergence Parent Company Name/ Winn-Dixie/WINNV Financial Profile
Ticker 12-Month Period Amount
Prepetition EBITDA FYE 6/30/04 140
Post-Emergence EBITDA Forecast FYE 6/30/08 181
a
Did All Entities in the Group File? No Low 625
b
Court District Middle District of Florida Midpoint EV (Value) 758
Substantive Consolidationc Yes Equity Value Range
Effective Date 11/21/06 Midpoint EV/Post-Emergence EBITDA Estimate (x) 4.2
Total Debtd 578 10
Resolution Emerged/Reorganized (Public)

During the decade leading up to bankruptcy, Winn-Dixie faced increasing competition from Wal-Mart, Publix, dollar stores, and drug stores. The business was also
negatively affected by a number of factors including a) weak execution of merchandising and retail operations leading to inconsistent product quality, merchandise
offerings, store appearance, and customer experience; b) a focus on cost cutting rather than sales and service leading to poor decisions and lost market share; and
c) the company’s lack of investment in its store base and infrastructure. Poor operating results and operating losses led to rating downgrades and tighter credit terms
from some vendors. The company implemented a turnaround plan and reduced the store footprint. After closure of unprofitable locations, there continued to be
burdensome costs for leases on the dark stores.
Shortly after the second fiscal quarter earnings announcement on Feb. 10, 2005, the company experienced a reduction in vendor and other credit by more than
$130 million, and the company determined it would be best served by a reorganization under Chapter 11. On the first day of the bankruptcy, the company rejected
leases on 147 dark stores.

Going-Concern Enterprise Valuation
The third-party valuation advisor estimated a midpoint enterprise value for the purposes of the plan of $759 million solely for purposes of the plan of reorganization. The
valuation was as of July 2006, by which point certain assets had already been monetized.
The methodologies and assumptions were not disclosed. The advisor EBITDA Estimates
relied on management’s forecast of future results, which included the ($ Mil., FYE June 30) 2008 2009 2010 2011
following estimates of EBITDA: EBITDA 181 272 362 439
Based on the reorganized equity value of $749 million, the issuance of approximately 50 million total shares to creditors, and claims information as of June 26, 2006, the
recoveries for unsecured creditors were in accordance with the substantive consolidation compromise to unsecured creditor constituencies as described in the table
Estimated Recoveries for Select Claims.
• The gross estimate of proceeds in a liquidation scenario was in the range of $930.4 million–$1,020.1 million and was based on discounts to the $1.539.8 billion book
value of assets as of June 30, 2006, plus $106.97 million–$121.4 million proceeds from lease liquidation and $30.4 million–$62.1 million from pharmacy liquidation.
• The asset book values and discounts applied included:
o Cash and equivalents of $253.79 million at 100% of book value (estimated as of Sept. 30, 2006 book value)
o Trade and vendor receivables of $164 million at 70%–80% of book value (after prepetition receivable set-offs of $59 million)
o Inventory of $497 million at 62% of cost
o Land and buildings of $112 million at 83%–91%
o Equipment and leasehold improvements of $393 million at 6%–13% of book value
o There were incremental administrative costs and store lease rejection claims in a going-out-of-business store liquidation, including $224 million additional claims for
store lease rejections plus liquidation claims associated with the headquarters and distribution centers.
• Unsecured recoveries in a Chapter 7 liquidation were estimated to have been in the range of 4%–13%.
a
W-D (Bahamas) and insurance subsidiary were not included in the filing. bOriginal filing in Southern District of New York, then transferred to Middle District of Florida.
c
There was a settlement with respect to substantive consolidation among various unsecured claimant classes that determined the number of new shares received per
$1,000 of claims. dPetition date debt excludes $162 million of letters of credit and lease debt equivalents and emergence debt excludes $239 million letters of credit.
Source, unless otherwise noted: Disclosure statement with respect to joint plan of reorganization dated Aug. 9, 2006.

September 28, 2016
Leveraged Finance
Winn-Dixie Stores, Inc. (Continued)

DIP or Other $800 Million DIP Facility 287.1 100 RR1 287 — — — —
Administrative
Secured AmSouth Bank Collateralized 17 100 RR1 — 17 — — — —
Letter of Credit
Secured Secured Tax Claims 26 100 RR1 26 — — — — —
Unsecured $300 Million of 8.875% Senior 310.5 95.6 RR1 — — — — 300 —
Notes Due 2008
Unsecured Landlord Claims 284.1 70.6 RR3 — — — — 200.5 —
Unsecured Vendor/Supplier Claims 218.9 70.6 RR3 — — — — 154.6 —
Unsecured Retirement Plan Claims 87.7 59.1 RR3 — — — — 51.9 —
Unsecured Other Unsecured Claims 84.1 53.2 RR3 — — — — 44.7 —
Intercompany Intercompany Claims N.A. 0–100.0 N.A. — — — — — —
Equity Winn-Dixie Interests 0 0 N.A. — — — — — —
Estimated Claims 1,314.9 — Recoveries 313 17 0 0 751.7 0
Debt of Nonfiling Affiliates on 0 — — — 100 — — — —
Emergence Date

DIP or Other $800 Million DIP Facility • Received cash or other such treatment that the holder and company agreed to in writing.
Administrative • Included $40 million in term loans and $220.6 million of letters of credit primarily related to worker compensation.
• Guaranteed by all debtors and secured by all assets.
• Other administrative claims totaled $66.5 million and included wages and salaries incurred after the petition date,
professional fees for services rendered after the petition date, obligations under retention and severance plans,
certain fees and expenses, cure payments for leases, and contracts that were assumed under section 365 of the
bankruptcy code.
Secured AmSouth Bank Collateralized • The legal and contractual rights of the holder of the AmSouth Bank collateralized letter of credit claim were
Letter of Credit reinstated.
• Cash collateralized
Secured Secured Tax Claims • Received distributions over a six-year period following the effective date, plus interest at a rate of 6% per year.
• $6 million of tax claims were excluded from the secured tax claims and instead classified as priority claims
Unsecured $300 Million of 8.875% Senior • Received 62.69 shares of new common stock for each $1,000 of allowed claims.
Notes Due 2008 • All noteholder claims were deemed allowed in the amount of $310.5 million for purposes of the plan, which
included $10.5 million of accrued and unpaid interest.
• Distributions to noteholders and other unsecured claim classes were based on a compromise and settlement
Unsecured Landlord Claims • Received 46.26 shares of new common stock for each $1,000 of allowed claims.
• Includes lease rejection claim damages.
Unsecured Vendor/Supplier Claims • Received 46.26 shares of new common stock for each $1,000 of allowed claims.
• Could have elected to reduce claim to $3,000 and receive cash in an amount of 67% of allowed claim, subject to
certain limits.
Unsecured Retirement Plan Claims • Received 38.74 shares of new common stock for each $1,000 of allowed claims.
• Could have elected to reduce claim to $3,000 and receive cash in an amount of 67% of allowed claim, subject to
certain limits.
Unsecured Other Unsecured Claims • Consisted of unsecured claims in amounts greater than $3,000 that were not noteholder claims, a landlord claim,
a vendor/supplier claim, or a retirement plan claim.
• Received 34.89 shares of new common stock for each $1,000 of allowed claim, or could elect to reduce claim to
$3,000 and receive cash in an amount of 67% of the allowed claim.
Intercompany Intercompany Claims • Intercompany interests did not receive any distributions under the plan and were deemed to have rejected the
plan.
• The company had the option to elect to adjust, continue, or capitalize any intercompany plan subject to
stockholder consent.
Equity Winn-Dixie Interests • Old Winn-Dixie common stock interests and rights were canceled on the effective date.
• Holders received $0 distributions and were deemed to have rejected the plan of reorganization.
a
Wachovia agreed to provide a $725 million exit facility with a letter of credit sublimit. There were $239 million of letters of credit and $10 million of debt estimated at
emergence. DIP – Debtor in possession. N.A. – Not available. RR – Recovery Rating.
Source, unless otherwise noted: Disclosure statement with respect to joint plan of reorganization dated Aug. 9, 2006.

September 28, 2016
Leveraged Finance
Winn-Dixie Stores, Inc. (Continued)

Cash on Filing Date $245.3 million as per cash flow statement in monthly operating report for period Feb. 22, 2005–March 9, 2005.
Prepetition Bank Facility Commitments $600 million credit facility.
Prepetition Bank Facility Borrowings on Filing Date $427 million of letters of credit and borrowings under the $600 million prepetition credit facility.
Was the DIP a New Money Facility or Roll Up of a The $800 million DIP facility was partially a new money facility and partially used to roll up borrowings under the
Prepetition Facility? $600 million prepetition credit facility.
Executory Contracts Between the petition date and the disclosure statement date the company rejected 454 leases, primarily related
to store closings. The company closed 374 stores in fiscal 2006. Through the disclosure statement date, the
debtors assigned or terminated 131 leases for value in excess of $58 million (excluding value from inventory).
Deficiency Claims Not disclosed.
Contingent Claims Distributions to disputed claims that become allowed claims were made from a common stock reserve.
Intercompany Claims No distributions under the plan. Debtor could adjust or capitalize these claims with stockholder consent.
Pension Claims/Motions Management retirement plans were terminated on the effective date. Claims related to the two management
plans were paid in the form of new common stock with the recovery rate that resulted from the settlement. The
management supplemental plan (MSP) and supplemental retirement plan (SRP) claims were reduced by 25%
then allowed as unsecured claims. The 401(k) plans were continued.
Recipient Various unsecured.
Source: Fitch Ratings, disclosure statement with respect to joint plan of reorganization dated Aug. 9, 2006.
Winn-Dixie Stores — Bond Price History

($300 Mil. 8.875% Senior Notes Due 2008)
(% of Par)
100
Filing Date: 2/21/05 Confirmation Date: 11/9/06
85
70
55
40
2/04 4/04 6/04 8/04 10/04 12/04 2/05 4/05 6/05 8/05 10/05 12/05 2/06 4/06 6/06 8/06 10/06 12/06
Source: Bloomberg.

September 28, 2016
Leveraged Finance
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Retail Bankruptcy Enterprise Value and

Retail Bankruptcy Enterprise Value and Creditor

www.fitchratings.com September 28, 2016

Retail Bankruptcy Enterprise Value and Creditor Recoveries 2

Key Drivers of Retail Rise of Discounter Competition

Increased Online Penetration

Declining Mall Traffic

Shift in Spending to Intangible Categories

Retail Bankruptcy Enterprise Value and Creditor Recoveries 3

Bankrupt Retailers Often Lack “Reason to Exist”

Retail Bankruptcy Enterprise Value and Creditor Recoveries 4

Retail Bankruptcy Enterprise Value and Creditor Recoveries 5

Grocer Real Estate Drives Going Concern Exits

Retail Bankruptcy Enterprise Value and Creditor Recoveries 6

Retailers and Supermarkets that Continued as Going Concerns

Retail Bankruptcy Enterprise Value and Creditor Recoveries 7

Fitch typically applies a 4.0x–6.0x enterprise reorganization multiple to forecasted post-

Reorganization Multiples for Going Concern Reorganizations

Comparison of Prepetition and Post-Emergence EBITDA

Retail Bankruptcy Enterprise Value and Creditor Recoveries 8

Liquidation Case Studies

Sample Liquidation Agency Agreement Proceeds Distribution

Distribution of Liquidation Proceeds

Retail Bankruptcy Enterprise Value and Creditor Recoveries 9

Liquidation Agency Agreements

ALCO Stores, Inc.

The Bombay Company, Inc.

Borders Group, Inc.

Retail Bankruptcy Enterprise Value and Creditor Recoveries 10

Circuit City Stores, Inc.

Finlay Enterprises, Inc.

Retail Bankruptcy Enterprise Value and Creditor Recoveries 11

The company decided to liquidate prior to the bankruptcy filing date.

Linens ‘n Things, Inc.

Movie Gallery Inc.

Retail Bankruptcy Enterprise Value and Creditor Recoveries 12

Syms Corp./Filene’s Basement, LLC

Retail Bankruptcy Enterprise Value and Creditor Recoveries 13

The liquidation of all stores was completed by Dec. 27, 2008.

Retail Recovery Rates

First-Lien Lenders Recover Well

Second-Lien Recoveries Vary by Retailer

Unsecured Debt Recovers Poorly

Retail Bankruptcy Enterprise Value and Creditor Recoveries 14

Recovery Rates by Claim Seniority

Retail Bankruptcy Enterprise Value and Creditor Recoveries 15

Retail Bankruptcy Enterprise Value and Creditor Recoveries 16

Retail Bankruptcy Enterprise Value and Creditor Recoveries 17

Retail Bonds and Loans of Concern

Institutional Term Loans of Concern

Sector Default Rate

Retail and U.S. High Yield Market Default Rates

(Par Weighted Default Rate) Retail Sector High Yield Market

Source: Fitch U.S. High Yield Default Index, Advantage Data.

Retail Bankruptcy Enterprise Value and Creditor Recoveries 18

Concession Payments (Settlement Distributions)

Retail Bankruptcy Enterprise Value and Creditor Recoveries 19

Concession Payments (Settlement Distributions) (Continued)

No Concession Payments (No Settlement Distributions)

Retail Bankruptcy Enterprise Value and Creditor Recoveries 20

ALCO Stores, Inc.

Issuer Profile Key Drivers of Bankruptcy Filing

Events Leading Up to Bankruptcy (or Contributing Factors)