Mrs. Fields’ Original Cookies Inc. received bankruptcy court approval of all of its first day motions, including approval to:
* Continue to pay employee salaries, wages, and benefit programs;
* Pay vendors in the normal course of business for goods and services provided to the Company; and
* Maintain uninterrupted delivery of products and services to the Company’s franchisees and customers.
Included in today’s approvals was court authorization to access the necessary funds from the $90 million in previously restricted deal proceeds to fund business operations during the Chapter 11 process. The company also is pursuing a $10 million credit line that will be used, in conjunction with cash flows from normal operations, to support all of the company’s go-forward operations and working capital needs upon emergence from Chapter 11.
“We were very pleased with the court’s positive response to our first day motions. Receiving approval so quickly places Mrs. Fields in the best possible position as we move toward completing our restructuring. We fully expect to receive court approval of our reorganization plan at the scheduled October 2, 2008 Confirmation Hearing and to emerge from these proceedings a stronger, more viable company with a drastically improved balance sheet. With our first day motions behind us, we can now focus our attention on finalizing post-emergence plans leveraging our new financing and equity structures to drive results for our franchising, gifting, and branded retail businesses,” says Michael Ward, interim Co-CEO.
On August 24, 2008, Mrs. Fields and certain of its subsidiaries filed voluntary bankruptcy petitions under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. As part of the filing, the Company has also filed its prepackaged Plan of Reorganization. The prepackaged bankruptcy will significantly improve the Company’s balance sheet by exchanging approximately $195 million in bondholder debt for cash, new bonds and a controlling equity stake in the reorganized company.