Destination Maternity has approved Marquee Brands as the leading “stalking horse” bidder of several remaining assets of its business. Under a proposed $50 million sale, Destination Maternity would shutter its remaining 235 stores, while Marquee Brands, a brand licensing firm, would acquire the retailer’s e-Commerce sites, intellectual property and its leased departments across third-party retailers.
Under the terms of a stalking horse bid, which is used as a starting bid or a minimal accepted offer, other interested bidders must surpass the $50 million if they want to buy the company. There are at least 21 active potential buyers conducting due diligence, with three submitting written proposals for a stalking horse bid that contemplated an acquisition of certain portions of Destination Maternity’s business. But so far, only negotiations with Marquee led to a definitive agreement, according to court documents.
Upon filing for bankruptcy in October amid $244 million in debt, declining sales and falling pregnancy rates across the U.S., Destination Maternity operated 435 stores across its three brands, including namesake Destination Maternity, Motherhood Maternity and Pea in the Pod. Prior to the bankruptcy filing, the retailer had planned to close 240 to 280 stores through fiscal 2022. The retailer also operated more than 420 leased locations within selected department stores and baby specialty stores.
Destination Maternity is requesting that the bankruptcy court judge schedule an expedited hearing to approve the stalking horse bid on Dec. 3, 2019, according to court documents. Rival bids are due Dec. 5, and an auction, if necessary, is set for Dec. 9. A sale hearing is slated for Dec. 12, with a deal expected to close by the end of the year.
Under the deal, a joint venture composed of liquidators Hilco Merchant Resources and Gordon Brothers Retail Partners would sell inventory, fixtures, equipment and other assets through store-closing sales at the 235 stores where liquidation sales aren’t already in process.