Orchard Supply Hardware Stores (NASDAQ:OSH) Wednesday received U.S. Bankruptcy Court approval for several motions that will provide the company with $177 million in additional financing and allow it to continue to pay employees and maintain operations at its stores.
The San Jose, Calif., home improvement chain filed for Chapter 11 bankruptcy reorganization on June 17 and agreed to be acquired by Lowe’s Companies for $205 million in cash, plus the assumption of payables owed to nearly all of Orchard’s suppliers. The June 19 bankruptcy court decision will allow Orchard to continue operating its business as it completes the reorganization.
“The motions approved today will help ensure we continue to operate our business as usual and uphold our commitments to all of our stakeholders while we work to achieve our financial objectives,” company president and CEO Mark Baker said Wednesday.
Among the approved motions, the court granted Orchard access to $177 million in debtor in-possession financing from Wells Fargo Bank and other lenders. The financing, in addition to Orchard’s ongoing cash flow, gives Orchard cash to meet its financial obligations while the Chapter 11 process proceeds.
The court also approved motions giving Orchard authority to, among other things, pay employee wages and benefits throughout the Chapter 11 process, including health and medical benefits, paid time off, expense reimbursement and other incentive programs, as well as maintain its Club Orchard customer rewards program, continue coupons and promotions, honor its gift cards and otherwise serve customers as usual.
Additionally, Orchard was granted approval to accept bids from companies to manage store closing sales for an initial eight stores, with potential additional stores to be determined as the Chapter 11 process continues.
Under Orchard’s agreement with Lowes, the company will operate as a separate, standalone business at the completion of the sale process, retaining its brand, management team and associates. The company says it will benefit from the big box chain’s financial stability, combined with the benefits of its balance sheet restructuring, will allow Orchard to continue its repositioning and growth strategy.
Orchard’s customers and suppliers can access additional information about the bankruptcy filing at www.OrchardRestructuring.com. Orchard also has established a supplier support center, which may be reached at 855.529.6819 or email@example.com.