CASE SUMMARY: Dean & DeLuca Seeks to ‘Position Itself to Re-Open Stores’ After Failed Expansion and Mid-2019 Shutdown

Dean & DeLuca New York, Inc., a New York-based multi-channel retailer of premium gourmet and delicatessen food and beverage products under the Dean & DeLuca brand name, filed for chapter 11 protection on Tuesday in the Bankruptcy Court for the Southern District of New York. The company ceased operations in mid-2019, with no retail outlets remaining (and all leases terminated) owing to a “liquidity crisis that impeded execution of its expansion strategy.” After the shutdown, the debtors worked with their two primary creditors and lenders - Pace Development Corporation (which acquired Dean & DeLuca in 2014 through its wholly owned subsidiary Pace Food Retail Co., Ltd.) and Siam Commercial Bank Public Company Limited - on an out of court reorganization that failed “due to the number and varying interests of the Debtors’ creditor body of approximately 1,300 individuals and entities.”

Shortly before the petition date, on March 27, the debtors, Pace and Siam Commercial Bank, or SCB, entered into a loan advance and security agreement, through which SCB committed to provide loans to fund the reorganization, with the first tranche of $750,000 used as retainers for the debtors’ bankruptcy advisors. Pace and the other debtors guaranteed Dean & DeLuca, Inc.’s obligations under the loan, and the debtors granted SCB a lien in all of their assets. The rest of the committed loans would be in the form of DIP financing, and the debtors say that they anticipate filing a separate request for approval of the DIP loan “as soon as possible.” The company has also had “fruitful” negotiations with certain stakeholders, including Pace and SCB, on the terms of a plan of reorganization, through which Pace would contribute new money for the debtors to re-launch retail operations.

The company filed chapter 11, according to the first day declaration of co-Chief Restructuring Officer Joseph Baum, to “to effectuate a restructuring transaction that would preserve the value of the Dean & DeLuca brand, position itself to re-open stores and rehire employees, and provide financial returns and new business opportunities to creditors.” The board resolutions attached to the petition indicate that “a principal goal of the Corporation is to effectuate a successful sale of all or a substantial part of its assets in the Chapter 11 Case or to undertake a substantial recapitalization or similar transaction.”

The first day hearing has yet to be scheduled.