Purpose of this Website

This website was created to assist the Creditors’ Committee in providing access to information to creditors and to solicit and receive comments from such creditors. Please use the tabs on the left hand side of this page to navigate this website and obtain information. If you have any questions or comments you wish to share with the Creditors’ Committee, please send an email by clicking on the tab entitled "Ask a Question."

General Case Background

On March 21, 2007, Hancock Fabrics, Inc., along with six of its affiliates (collectively, the “Debtors”), each filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”). The Debtors' cases (collectively, the “Bankruptcy Cases”) are being jointly administered under Case No. 07-10353. The Bankruptcy Cases are pending before the Honorable Brendan Linehan Shannon in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court").

The United States Trustee appointed a committee (the “Creditors' Committee”) to represent the general unsecured creditors in this case. A list of the Creditors' Committee members can be found by clicking the "Committee Members" tab on the left hand side of this page.

Debtors' Exclusivity Period

On or about December 21, 2007, pursuant to an order of the Bankruptcy Court, the Debtors' exclusive period to file a plan (the "Exclusivity Period") was extended through May 30, 2008. To see the Exclusivity Order, please click here. However, solely with respect to the Creditors’ Committee, the Exclusivity Period was extended through March 31, 2008, provided that the Debtors deliver to the Creditors' Committee (a) a plan of reorganization term sheet by January 15, 2008 (the “Term Sheet Deadline”), and (b) a draft plan of reorganization and a draft disclosure statement by January 31, 2008 (the “Draft Plan Deadline”).

The Debtors provided the Creditors' Committee with a plan of reorganization term sheet by the Term Sheet Deadline and a draft plan of reorganization and a draft disclosure statement by the Draft Plan Deadline. Subsequently, as contemplated by the Exclusivity Order, the Creditors’ Committee provided the Debtors with written consent to further extensions of the Exclusivity Period up through and including April 30, 2008, and then to May 30, 2008.

FACTA Settlement

On or about July 20, 2007, Kathy Aliano (“Plaintiff”), as the named plaintiff and as a representative on behalf of all members of a purported class, asserted that Hancock Fabrics, Inc. (“Hancock”) violated certain requirements imposed by the Fair and Accurate Credit Transactions Act (“FACTA”). Specifically, Plaintiff asserted that Hancock printed more than the last five digits of its customers’ credit or debit card numbers and/or the expiration date of its customers’ credit or debit cards on receipts presented to them at its retail stores, in violation of FACTA, as specifically set forth in the Complaint filed on July 20, 2007, as subsequently amended on or about January 7, 2008. To see the amended Complaint, please click here.

On or about January 7, 2008, Hancock and Plaintiff, on behalf of herself and all members of the purported class, entered into a settlement agreement (the “Agreement”), settling the purported class action. To see the Agreement, please click here. Under the terms of the Agreement, Hancock will, among other things, hold a Sale Event at all of its regularly operating retail store locations on May 26, 2008, for the benefit of class members, at which any person making a purchase transaction will receive an automatic discount of ten percent (10%) off the total purchase price. The settlement also imposes certain other requirements, which are set forth in detail in the Agreement. Both the Equity Committee and Creditors' Committee supported the settlement.

On or about January 7, 2008, Hancock filed a motion (the “Motion”) requesting preliminary and final approval of the settlement of the purported class action, as set forth in the Agreement. To see the Motion, please click here. On January 22, 2008, the Bankruptcy Court preliminarily approved the settlement embodied in the Agreement as fair, adequate and reasonable. To see the order preliminarily approving the settlement, please click here.

On April 9, 2008, the Bankruptcy Court approved the settlement embodied in the Agreement as fair, adequate and reasonable on a final basis. To see the order finally approving the settlement, please click here.

Exit Financing

On April 17, 2008, the Bankruptcy Court authorized the Debtors to (i) enter into a commitment letter and a fee letter for exit financing with General Electric Capital Corporation ("GE Capital") and (ii) pay certain commitment and related fees. To see the Exit Financing Order along with the Commitment and Fee Letters, please click here. The Debtors will use the Exit Financing (the "GE Exit Financing Facility") to, among other things, refinance their existing secured indebtedness, fund a plan of reorganization and finance the Debtors' post-emergence operating expenses and other working capital needs. To see a summary of the terms of the Commitment and Fee Letters, please click here.

The Debtors intend to secure in the near term a B-piece exit financing to supplement the GE Exit Financing Facility. As soon as the Debtors finalize the terms and conditions of a commitment letter for a B-piece exit financing facility, they will file a motion with the Bankruptcy Court requesting authority to, among other things, enter into a commitment letter with the B-piece lender.