Bankruptcy Updates: Harry & David, Borders

Borders Group Bidding Procedures Approved
The U.S. Bankruptcy Court on August 11, 2011 approved bidding procedures in connection with sale of certain of Borders Group's intellectual property assets free and clear of all liens, interests, claims and encumbrances. An auction is scheduled for September 14, 2011. The Court also approved the Debtors' motion for approval of bidding and auction procedures for the sale of unexpired non-residential real property leases. Hearings to consider approval of the sales of the first and second round leases are scheduled for September 8, 2011 and September 20, 2011, respectively.

Harry & David Agreements
Harry & David Holdings reached an agreement with the Pension Benefit Guaranty Corporation (PBGC) on August 12, 2011 relating to the termination of the Company's pension plan and the treatment of the PBGC's claim under the Company's Chapter 11 Plan of Reorganization, which the US Bankruptcy Court confirmed. Harry & David will turn over its pension plan assets to the PBGC, and the PBGC will take over the administration of the pension plan no later than September 12, 2011.

In addition, the plan allows the company to convert all of its approximately $200 million of outstanding public notes into equity of the reorganized company and includes an equity capital raise that will generate $55 million in equity financing upon the company's emergence from Chapter 11 protection. Harry & David will use proceeds from the equity capital raise to satisfy obligations arising from the Company's $55 million post-petition term loan. Additionally, the company has a $100 million revolving loan commitment to finance its normal seasonal working capital needs after it exits Chapter 11.