Hampshire Group Ltd (fka HAMPQ)

[Warchest]

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Hampshire Group Settles CFO Pay, Aims For Ch. 11 End
By Jeff Montgomery

Law360, Wilmington (March 8, 2017, 6:39 PM EST) -- Bankrupt menswear supplier Hampshire Group Ltd. and its unsecured creditors compromised Wednesday on retention terms for the company’s chief financial officer, reaching the agreement as Hampshire heads into the final turn of its Delaware Chapter 11 liquidation.
An order signed by Judge Brendan L. Shannon authorized $187,500 in payments to former GRL Capital Advisors LLC employee William Drozdowski for services from the company’s Nov. 23, 2016, Chapter 11 filing date through March 31.

The figure exceeds the $40,000-per-month rate Drozdowski received while doing the same work for Hampshire as a GRL employee, but was below the $55,000 monthly amount that prompted an objection from the creditors committee.

Hampshire attorney Michael D. DeBaecke of Blank Rome LLP said settlement talks on the CFO’s compensation widened on Wednesday into efforts to reach a consensus on bringing the case to a close as sales of the company’s remaining assets conclude.

“This is a game plan to get us through the end of the month,” DeBaecke said, adding, “There will be a consensus” between the company and creditors regarding the rest of the case.

Unsecured creditors committee attorney Ilan D. Scharf of Pachulski Stang Ziehl & Jones LLP told Judge Shannon that the committee is supporting a quick wind-up of the bankruptcy, possibly with a combined hearing on the company’s Chapter 11 disclosure and plan confirmation.

“Our objective and game plan would be to have a plan confirmed as quickly as possible so the remaining liquidations and collections would all be done by a liquidating trustee,” Scharf said. “There is a possibility, or a likelihood, that we will be short on cash to pay administrative claims.”

In case of a shortfall, Scharf said, there would be a proposal for professionals to take payment from funds left after payment of priority claims. He noted, "We don’t want to have professionals standing in the way of progress.”

Judge Shannon said the Delaware bankruptcy court’s rules have been modified to allow consideration of combined plan and disclosure statements, and that he would be open to considering the approach for Hampshire.

“The fact is that time in Chapter 11 is money, and it’s expensive in a case such as this to be obliged to keep it in bankruptcy for another six weeks or two months or more to get through the disclosure process,” which, while important, can also be a burden, Judge Shannon said.

Hampshire filed for Chapter 11 protection in November, listing nearly $42 million in debt. The company began liquidating ahead of the filing, but sought bankruptcy protection under the pressure of collection efforts by its South Korean suppliers and unsecured creditors, Onewoo Corp. and V.J. One Corp.

In January, Judge Shannon gave Hampshire the okay for an unusually quick sale process that unfolded over the course of only about five days after hearing testimony from a top officer that goods bound for store shelves could become stranded and the company's brand harmed if the debtor failed to raise cash right away.

New York City-based Fashion Exchange LLC put in the top bid of $910,000, which included $683,000 in new money and payments for arriving sea and air shipments of clothing from Asia.

Hampshire specializes in designing and marketing men’s clothing lines to department stores and other mass-market retailers, and at one point held the license for the well-known Dockers brand of pants from Levi Strauss & Co.

Hampshire is represented by Michael D. DeBaecke, Bryan J. Hall and Leon R. Barson of Blank Rome LLP.

The unsecured creditors committee is represented by Richard E. Mikels, Ilan D. Scharf and Peter J. Keane of Pachulski Stang Ziehl & Jones LLP.

The case is in re: Hampshire Group Ltd. et al., case number 1:16-bk-12634, in the U.S. Bankruptcy Court for the District of Delaware.

--Additional reporting by Matt Chiappardi. Editing by Jack Karp.