DAVIDsTEA Inc. (NASDAQ:DTEA) Files An 8-K Bankruptcy or Receivership

DAVIDsTEA Inc. (NASDAQ:DTEA) Files An 8-K Bankruptcy or Receivership
Item 1.03 Bankruptcy or Receivership.

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As previously disclosed, on July 8, 2020, DAVIDsTEA Inc. (the “Company”), a corporation incorporated under the Canada Business Corporations Act, and its wholly-owned subsidiary, DAVIDsTEA (USA), Inc. (the “Subsidiary” and together with the Company, the “Debtors”) commenced proceedings (the “Canadian Proceedings”) under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”) with the Québec Superior Court (the “Canadian Court”). On July 8, 2020, the Canadian Court issued an order, which, among other things, appointed PricewaterhouseCoopers Inc., a licensed insolvency trustee, as monitor (the “Monitor”), in accordance with the provisions of the CCAA.

As previously disclosed, on July 8, 2020, the Monitor also filed petitions under Chapter 15 of the United States Bankruptcy Code for recognition of the Canadian Proceedings and related relief. After issuing an order granting provisional relief, on August 4, 2020, the United States Bankruptcy Court for the District of Delaware (the “U.S. Court”) issued an order recognizing the Canadian Proceedings as the foreign main proceedings on a final basis and providing certain related relief.

On June 16, 2021, the Canadian Court entered an order (the “Sanction Order”) sanctioning, approving and enforcing the Plan of Compromise and Arrangement dated May 4, 2021 (as amended on May 6, 2021, the “Plan”) which the Debtors had filed under the CCAA. On June 17, 2021, the U.S. Court entered an order (the “U.S. Order”) giving full force and effect in the United States to the Sanction Order.

The following is a summary of the material terms of the Plan. This summary highlights only certain substantive provisions of the Plan and is not intended to be a complete description of the Plan. This summary is qualified in its entirety by reference to the full text of the Plan, the Sanction Order and the U.S. Order, which are attached hereto as Exhibits 99.1, 99.2 and 99.3, respectively, and incorporated by reference herein. Capitalized terms used but not defined in this Current Report on Form 8-K have the meanings set forth in the Plan.

Plan of Compromise and Arrangement

The Plan provides for an aggregate distribution of approximately CAN$18 million, comprised of three funds: (i) the Canadian Convenience Class Fund, (ii) the DT Fund and (iii) the DT USA Fund, to be distributed to the classes of unsecured creditors as detailed below. The Plan divides unsecured creditors into those having claims against the Company (the “Unsecured Creditors of DT”) and those having claims against the Subsidiary (the “Unsecured Creditors of DT USA”).

Distributions to Creditors of the Company

For purposes of receiving distributions under the Plan, Unsecured Creditors of DT who have a Proven Claim of up to CAN$1,800 will be deemed to form part of a convenience class (the “Canadian Convenience Class”). All Unsecured Creditors of DT who have a Proven Claim in excess of CAN$1,800 have the option to elect to form part of the Canadian Convenience Class. The distribution of the Canadian Convenience Class Fund and the DT Fund to creditors of the Company under the Plan is summarized as follows:

 

DAVIDsTEA Inc. Exhibit

To view the full exhibit click here

About DAVIDsTEA Inc. (NASDAQ:DTEA)

DAVIDsTEA Inc. is engaged in the retail and online sale of tea, tea accessories, and food and beverages in Canada and in the United States. The Company’s segments include Canada and the U.S. The Company is a branded retailer of specialty tea, offering approximately 150 loose-leaf teas, pre-packaged teas, tea sachets and tea-related gifts, accessories, and food and beverages primarily through approximately 190 DAVIDsTEA stores, which are operated by the Company, and its Website, davidstea.com. Additionally, the Company offers on-the-go tea beverages in its retail stores. The Company’s tea accessories include tea mugs, travel mugs, teacup sets, teapots, tea makers, kettles, infusers, filters, frothers, tins and spoons. The Company offers beverages range from the standard hot or iced tea to its Tea Lattes. The Company’s different flavors of loose-leaf tea span eight tea categories: white, green, oolong, black, pu’erh, mate, rooibos and herbal tea.

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