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Footwear retailer Footstar signs two contracts for reorganization

Nov '05
Leading discount footwear retailer Footstar Inc announced that it has reached an agreement with the unsecured creditors' and equity committees in its chapter 11 cases with respect to all of the terms to be included in a consensual plan of reorganization. The plan is subject to confirmation by the U.S. Bankruptcy Court for the Southern District of New York in White Plains.

Separately, the Company also announced that it has entered into an amended credit agreement with its lending group, led by Fleet National Bank, which revises the provisions for exit financing upon the Company's consummation of a Plan of Reorganization.

"With these two agreements, they are now positioned to implement Plan of Reorganization and emerge from chapter 11," said Dale W. Hilpert, Chairman and Chief Executive Officer.

"Company believe that the agreement have reached with committees on a consensual plan fairly serves and balances the interests of all of Footstar's stakeholders. In addition, amended credit facility will provide increased liquidity for Footstar upon emergence."

Under the agreement with the committees, all unsecured creditors will be paid in full with postpetition interest at the rate of 4.25 percent per annum. In addition, Footstar will distribute the undisputed portions of unsecured creditors' disputed claims on the distribution date of the plan, with the balance to be distributed upon resolution of such disputes. Equityholders will retain their equity interests.

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January 2022

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