Destination Maternity Announces $50M Stalking Horse Bid

Retailer Destination Maternity Corp. is asking the Delaware bankruptcy court to approve a $50 million stalking horse bid from brand acquisition company Marquee Brands for its e-commerce operation, store-in-store locations and trademarks.

The bid Destination Maternity is seeking approval of would include an agreement with an agency to sell the inventory and fixtures of the 235 stand-alone stores that are not included in the deal, according to the motion filed with the court Friday.

“We are pleased that Marquee Brands recognizes the value of our business and has made a competitive bid during our marketing and sale process,” Lisa Gavales, Destination Maternity’s interim CEO, said in an announcement of the bid. “We are working to continue the sale process, including the auction, and look forward to an outcome that will maximize value for our stakeholders.”

Destination Maternity filed for bankruptcy protection in October along with its U.S. and Canadian affiliates — Motherhood Maternity and A Pea in the Pod — lugging $244 million in overall debt.

The company entered court with plans to shut down 210 of its 998 retail locations through store-closing sales and is pursuing bids for its remaining assets, with a Dec. 5 bid deadline and a planned auction on Dec. 9, according to court records. A sale hearing is planned for a few days after the auction.

Destination Maternity’s stores consist of 452 stand-alone stores and 546 leased locations inside department and baby specialty stores.

According to the stalking horse bid approval motion Marquee is one of “at least 21 active potential buyers” who were conducting due diligence on Destination Maternity as of Friday.

Marquee is the retail brand acquisition arm of investment management firm Neuberger Berman. In 2017, it acquired the rights to bankrupt womenswear retailer BCBG Max Azria’s intellectual property for $108 million, and earlier this year it bought the Martha Stewart and Emeril Lagasse brands from Sequential Brands Group for $205 million.

The Marquee bid would include the in-store locations and e-commerce operations, plus Destination Maternity’s intellectual property. The inventory and other items from the remaining stand-alone stores not already shutting down would be sold in going-out-of-business sales conducted by Gordon Brothers and Hilco Merchant Resources.

The deal includes a breakup fee of up to 3.5% of the purchase price, plus up to $750,000 in expenses.

In a separate motion asking the court to shorten the notice period and allow the stalking horse motion to be heard Wednesday, Destination Maternity said all the parties had “worked tirelessly” over the Thanksgiving holiday to conclude the deal.

“The debtors recognize that the stalking horse motion is being heard on a very compressed timeline, but believe that having a stalking horse bidder in place prior to the December 5th bid deadline is critical to maximizing the value of the debtors’ assets pursuant to the sale process for the benefit of potentially all creditors,” Destination Maternity said.

Representatives for Destination Maternity and Marquee did not immediately respond to requests for comment Monday.

Destination Maternity is represented by Adam G. Landis, Kerri K. Mumford and Jennifer L. Cree of Landis Rath & Cobb LLP and Christopher T. Greco of Kirkland & Ellis LLP.

Counsel information for Marquee was not immediately available Monday.

The case is In re: Destination Maternity Corp., case number 1:19-bk-12256, in the U.S. Bankruptcy Court for the District of Delaware.