UPDATE: March 1, 2021: A federal bankruptcy court approved Christopher & Banks' sale of its e-commerce business last week to an affiliate of Hilco Merchant Resources. In February, Christopher & Banks canceled an auction for the unit, after no other qualified bids emerged other than a stalking force bid from the buyer. The sale comes with a closing cash payment of $12.7 million.
- Christopher & Banks has a bid on its e-commerce business from a term loan lender that would set the baseline for a Chapter 11 auction, according to court documents.
- The bankrupt women's apparel seller signed a letter of intent with ALCC, LLC, an affiliate of Hilco Merchant Resources, to serve as the stalking horse at the auction.
- Under the bid, the purchase price for the e-commerce business would consist of the value of the term loan ($8.1 million) along with other assumed liabilities. According to the agreement, competing bids would have to top the bid by at least $650,000 to be considered.
Christopher & Banks was among those hit hardest by the COVID-19 pandemic, with a core customer who has been staying home and avoiding the very occasions the apparel retailer's clothes are designed for.
After defaulting on multiple major financial obligations in early January, it filed for Chapter 11 with plans to liquidate its entire footprint of nearly 450 stores. Failing to find a buyer for its entire retail business, the company said that it would seek a sale of its e-commerce unit, which historically made up roughly a quarter of its sales and has been growing.
With the help of advisers from B. Riley, Christopher & Banks initially reached out to at least 200 parties around a possible sale. Most of them declined to pursue a deal, but three did indicate interest in buying the company's e-commerce assets, according to court papers.
Among them was ALCC, a major lender tied to Hilco Merchant Resources, the company carrying out the retailer's going-out-of-business sales. Taking over the digital business gives ALCC a way to recoup what Christopher & Banks owes it.
Christopher & Banks' e-commerce business went through tremendous growth last year as store-based, and overall sales plummeted due to the pandemic and the spring's temporary closures. Through October, the company's e-commerce sales grew nearly 28% year over year to $71.2 million, according to its latest financial report. That helped make the digital business an "attractive asset," the company's CEO said in court papers earlier this month.
If a sale indeed happens, Christopher & Banks would join a growing cohort of brands left to sell online only after liquidating in bankruptcy, a trend driven both by the travails of mall-based store chains (especially those selling apparel) and the advent of tools to help sell online.
Christopher & Banks' auction and stalking horse bid from ALCC will need court approval. The company has proposed a Feb. 17 deadline for "qualified" bids, followed by a Feb. 19 auction, a Feb. 22 sale hearing in bankruptcy court and a target closing date of Feb. 26.