Creditors approve plan to keep Family Christian Stores open
by Lynde Langdon
Posted 8/10/15, 04:12 pm
Creditors for the bankrupt Family Christian Stores voted to allow the chain to reorganize and remain open, according to court documents filed today.
Family Christian Stores (FCS) entered Chapter 11 bankruptcy earlier this year with more than $100 million in debt. After several failed attempts to get court-approval for a quick buyout, FCS submitted a plan to its creditors for their approval.
Under the plan, a sister company called FC Acquisition will buy the company for between $52.4 and $57.5 million. That doesn’t mean FC Acquisitions is bringing that much cash to the table; it will take over about $30 million of FCS debt that it has agreed to pay at a later date.
Prior to the vote, FCS worked out a settlement with a group of Christian publishers and vendors whose inventory FCS held on consignment. The consignment vendors worried FCS would take possession of inventory it hadn’t yet paid for. But the settlement ensures the vendors can get a portion of the proceeds from any future sales of the disputed inventory. About 97 percent of the consignment vendors voted in favor of the bankruptcy plan.
The bank Credit Suisse, to whom FCS owed $34 million, also dropped its objection to the bankruptcy plan after striking a deal. According to court documents, FC Special Funding, the senior secured creditor for FCS, paid Credit Suisse $6 million to take over its claim against FCS. That meant FCS only owed $6 million on that debt to a company that supported its bankruptcy plan.
FC Special Funding had been backed by Richard Jackson, who also is president of the board of the nonprofit that owns FCS. Though Jackson has backed FC Special Funding, FCS asserted in court filings that Jackson does not own FC Special Funding, nor is he a director for it.
The bankruptcy plan should allow Family Christian Stores to remain open leading into the holiday shopping season.