A federal bankruptcy judge slashed the stalking horse bid for Tempnology LLC nearly 85 percent in a move to entice interest in its Coolcore and Dr. Cool performance fabric brands, which reputedly cool athletes without using chemicals.
In an Oct. 8 order issued in the New Hampshire district of the U.S. Bankruptcy Court, Judge Michael Deasy set the stalking horse bid for the company at $1.05 million. The price reflects a fraction of the sum sought by Schleicher & Stebbins Hotel LLC (S&SH LLC), which had asked the judge to credit $6.95 million it has invested developing the two brands, including $5.5 million in secured debt, toward its stalking horse bid.
Deasy opted to credit just $1.03 million of S&SH LLC’s investments toward its non-cash stalking horse bid after a court appointed examiner recommended reducing credit for its previous investment by at least $3 million to reflect the fact that the company converted $2 million of unsecured debt to secured debt and continued lending to the venture in months leading up the petition even though its principles knew Tempnology was unable to meet payment deadlines.
The order means that other prospective bidders must offer at least $1.3 million in cash by Nov. 2 to remain in the running for the brands’ assets. If a qualified bid emerges, S&SH could ask the judge formally rule on how much of its secured debt should be credited toward its bid and/or enhance its bid by offering cash. The court has scheduled a hearing for Nov 18 at which it could rule on whether to approve a sale of the business.
Tempnology LLC filed its Chapter 11 petition Sept. 1 after racking up losses of more than $7.5 million on sales of approximately $17 million during a 2.5 year period ended June 15, 2015. An advisory firm hired by the company has assembled a list of 150 potential bidders that includes Adidas and Nike. The court examiner’s report quotes Tempnology executives as saying they turned down a $15 million offer for the company this summer from a U.S. distributor who has since terminated their licensing agreement. The report also quotes sources who estimate that value of the company as being significantly lower.
Tempnology was formed in 2011 to commercialize Coolcore and Dr. Cool “chemical free” products that utilize three layers of fabric to keep body temperatures lower while in motion. The technology is currently available in Dr. Cool Recovery-On-The-Go Wraps and executives have said several outdoor performance brands were planning to launch collections featuring Coolcore fabrics in spring 2016.
