Showfields is facing concerns over its bankruptcy financing. The landlord at its Brooklyn store in New York City on Dec. 5 filed an objection to the final approval of its debtor-in-possession financing.
The landlord in its filing said the proposed DIP financing transaction is “to be provided by an entity controlled by one or more insiders” at Showfields. A group of funders cited a similar concern in an objection filed at the end of November.
The DIP Lender is listed as Showfields Investment LLC, with the loan agreement between the lender and Showfields for an amount of up to $2.5 million.
“The motion does not disclose the identity of the insiders of [Showfields] who are members or owners of the DIP Lender,” the landlord’s objection says. “Without transparency, there remains the possibility that the true purpose of the DIP Financing (rather than obtaining financing from a different source) is to allow the DIP Lender to procure a roll-up of the DIP Lender’s prepetition debt, to the detriment of [Showfields’] estates and their creditors.”
The landlord’s objection also alleges that Showfields did not “even attempt to satisfy their burden to demonstrate that the proposed DIP Financing” should be approved, such as not providing evidence to justify loan terms including the roll-up of over $1.6 million of the DIP Lender’s prepetition debt.
Additionally, the landlord’s objection claims that Showfields has not paid its rent throughout its bankruptcy despite budgeting for it throughout the proceedings.
“We are working with all creditors including the Brooklyn landlord on reaching a resolution to everyone’s satisfaction,” Showfields CEO and co-founder Tal Nathanel told Retail Dive via email. “We are very close, and hoping to announce something on that very soon.”
The landlord is requesting that a court-ordered approval of the DIP Financing transaction include rent payment requirements, the denial of the proposed roll-up and more.
Showfields in October filed for Chapter 11 bankruptcy under the Small Business Reorganization Act’s subchapter V. At the time of the petition date, the company noted it had approximately $3,117.58 of cash on hand and had estimated liabilities between about $1 million and $10 million.
The retailer – which once called itself “the most interesting store in the world” – sells a rotating mix of mostly digitally native brands.
