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TROY, MI-The former craft retail chain Frank's Nursery & Crafts Inc. is one step closer to becoming a real estate developer after winning a court approval of its bankruptcy-restructuring plan.
The United States Bankruptcy Court for the Southern District of New York approved a disclosure statement filed by the Troy-based company, allowing for it to retain possession of 42 parcels of real estate--former Frank's store locations--as it completes its Chapter 11 restructuring. Frank's said in a statement that all of its major equity holders and the official committee of unsecured creditors supported the plan.
The court has scheduled a June 14 hearing to consider final confirmation of Frank's reorganization plan. The company said if that plan were approved, it would emerge from bankruptcy by the end of the summer. The company could then begin to redevelop, sell or lease its real estate holdings.
Frank's previously announced that several existing shareholders of the company have offered to put up $120 million in financing for the new company. The company said it is also expecting approximately $83 million of notes to finance its real estate operations. Upon emergence from bankruptcy, Frank's shareholders who own 5,000 shares or less will receive 75 cents per share in cash. Shareholders who own more than 5,000 shares will be provided the option to receive 75 cents per existing share in cash, or exchange their existing shares for shares in the reorganized company (subject to dilution). Shareholders who hold 100,000 shares or more and are accredited investors will have the right to invest in the convertible notes and equity proposed to be issued by the reorganized company.
Until filing for bankruptcy in the fall of 2004, Frank's had been at one time the nation's largest chain of craft and lawn and garden care specialty stores. The chain's stores were all closed by the end of the 2004 holiday sales season.
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