PIER 1 IMPORTS, INC. (NYSE:PIR) Files An 8-K Bankruptcy or Receivership
Item 1.03. Bankruptcy or Receivership.
Pier 1 Imports, Inc. (the Company) announced on February 18, 2020, that, among other things, the Company and its subsidiaries (together, the Debtors) each filed a voluntary petition in the U.S. Bankruptcy Court for the Eastern District of Virginia (the Bankruptcy Court) requesting relief under Chapter 11 of Title 11 of the United States Bankruptcy Code (collectively, the Chapter 11 Proceedings). The Chapter 11 Proceedings are being jointly administered under the caption and case number: In re Pier 1 Imports, Inc., et al., Case No. 20-30805 (KRH). On June 23, 2020 the Company filed with the Bankruptcy Court the Amended Joint Chapter 11 Plan of Pier 1 Imports, Inc. and Its Debtor Affiliates. On July 30, 2020 the Bankruptcy Court held a confirmation hearing.
Confirmation of Plan
On July 30, 2020, following the confirmation hearing held on that date, the Bankruptcy Court entered the Order Confirming the Amended Joint Chapter 11 Plan of Pier 1 Imports, Inc. and its Debtor Affiliates (as it may be amended, supplemented or otherwise modified the Confirmation Order). The Confirmation Order confirmed the Amended Joint Chapter 11 Plan of Pier 1 Imports, Inc. and Its Debtor Affiliates (as it may be amended, supplemented or otherwise modified, the Confirmed Plan). Copies of the Confirmed Plan and Confirmation Order are filed as Exhibits 2.1 and 99.2, respectively, to this Current Report on Form 8-K, and are incorporated by reference into this Item 1.03. Capitalized terms used in this Current Report on Form 8-K and not otherwise defined will have the meanings given to them in the Confirmation Order and Confirmed Plan.
Summary of Confirmed Plan
The Confirmed Plan provides that on the Effective Date of the Confirmed Plan a Plan Administrator selected by the Term Lenders and consented to by the Company will be appointed and empowered to implement the Confirmed Plan, collect and distribute the proceeds from the liquidation of the Debtors and administer the wind-down of the Wind-Down Debtors in accordance with the Confirmed Plan, in the same fiduciary capacity as applicable to a board of managers, directors and officers. Subject to the provisions of the Confirmed Plan, the Plan Administrator will have all the rights, powers, and duties necessary to carry out his responsibilities under the Confirmed Plan in accordance with the Confirmation Order. Among other things, the Plan Administrators responsibilities include: (i) liquidating, receiving, holding, investing, supervising, and protecting the assets of the Wind-Down Debtors; (ii) taking all steps to execute all instruments and documents necessary to effectuate the distributions to be made under the Confirmed Plan; (iii) employing, retaining, terminating, or replacing professionals to represent it with respect to its responsibilities; (iv) paying all reasonable fees, expenses, debts, charges, and liabilities of the Wind-Down Debtors; (v) administering and paying taxes of the Wind-Down Debtors, including filing tax returns; and (vi) exercising such other powers as may be vested in it to order of the Bankruptcy Court or to the Confirmed Plan, or as it reasonably deems to be necessary and proper to carry out the provisions of the Confirmed Plan.
The Confirmed Plan provides for appointment of a Monitor to work cooperatively with the Plan Administrator to ensure compliance with the Wind-Down Budget and a Claims Representative to ensure an efficient and fair claims reconciliation process and to oversee the prosecution of estate causes of action, among other things.
The Confirmed Plan creates nine classes of claims against and interests in the Debtors. Holders of allowed claims in Class 1 (Other Priority Claims), Class 2 (Other Secured Claims), Class 3 (ABL Claims), Class 4 (Term Loan Claims) and Class 5 (General Unsecured Claims) are entitled to receive certain distributions, to the extent of available Distributable Proceeds after payment of more senior claims to the Waterfall Recovery priority provisions of the Confirmed Plan. Holders of claims in Class 6 (Intercompany Claims), Class 7 (Intercompany Interests), Class 8 (Interests in Pier 1) (which includes holders of Pier 1 Imports, Inc. common stock) and Class 9 (Section 510(b) Claims) will not receive any distributions or receive or retain any property under the Confirmed Plan on account of such claims and interests. The Confirmed Plan also provides for the establishment of reserves from which payment will be made of Administrative Claims, Priority Tax Claims, Professional Fee Claims and for purposes of resolving disputed claims and ongoing disputes, and funding various costs and expenses associated with the administration of the Confirmed Plan and the wind down of the businesses of the Wind-Down Debtors. The Confirmed Plan reflects the terms of certain settlements among the Debtors and various creditor constituencies that were accepted by the Debtors and such creditors, and approved by the Bankruptcy Court, as being in the best interest of the Debtors, their respective Estates, and holders of Claims and Interests, and fair, equitable and reasonable.
The Effective Date of the Confirmed Plan will be the Business Day selected by the Debtors on which: (a) no stay of the Confirmation Order is in effect; (b) all conditions precedent specified in Article IX.A of the Confirmed Plan have been satisfied or waived (in accordance with Article IX.B of the Confirmed Plan); and (c) the Confirmed Plan is declared effective by the Bankruptcy Court. The Effective Date is anticipated to occur between October 1, 2020 and October 10, 2020.
The foregoing description is a summary of the material terms of the Confirmed Plan, does not purport to be complete and is qualified in its entirety by reference to the full text of the Confirmed Plan filed as Exhibit 2.1 to this Current Report on Form 8-K.
Cautionary Note to Holders of the Companys Common Stock
As of August 1, 2020, the Company had 4,125,857 shares of common stock outstanding. The Confirmed Plan, as approved by the Bankruptcy Court, provides that the holders of the Companys common stock will not receive any distribution on account of their equity interests. The Companys common stock will be cancelled on the Effective Date. The Company intends to file a Form 15 with the Securities and Exchange Commission deregistering the Companys common stock to Rule 12g-4(a)(1) under the Securities Exchange Act of 1934 upon or promptly following the Effective Date. The Companys common stock may continue to be quoted on the OTC Pink Market, but under the terms of the Confirmed Plan the common stock has no underlying asset value and the