Footstar has received interim court approval to access a new $300 million debtor in possession (DIP) financing package that was committed to it by a bank group led by Fleet National Bank and GECC Capital Markets Group, Inc. This credit facility is now available to the Company, along with existing cash and cash flow from operations, to help fund its operations during the Chapter 11 process. The Company intends to make timely payment for goods received and services provided after the filing date in the normal course of business and in accordance with the terms of existing vendor agreements.
Judge Adlai S. Hardin of the United States Bankruptcy Court for the Southern District of New York in White Plains today also granted interim approval for all other “first-day motions” that Footstar made as part of its filings for reorganization under Chapter 11 of the United States Bankruptcy Code, including the motion granting vendors administrative expense priority status for post petition delivery of goods. In addition, the Court gave final approval for a motion authorizing the Company to continue to pay active employees in the normal manner and continue all employee health and benefit plans.
Dale W. Hilpert, Chairman, President and Chief Executive Officer of Footstar, said: “The first day of our Chapter 11 proceeding was productive. We are pleased to have received initial approval for our DIP facility and other first-day motions, which will enable us to transition into Chapter 11 with minimal disruption and to maintain normal operations as we move forward.”