Coldwater Creek Takes Over Soft Surroundings
Soft Surroundings is getting a second shot after the St. Louis company filed for bankruptcy in September.
Lifestyle competitor Coldwater Creek acquired the trouble women’s wear business in a nearly $20.1 million deal facilitated by Gordon Brothers. Soft Surroundings will operate a standalone website separate from Coldwatercreek.com.
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According to documents related to the deal, Coldwater Creek paid $10 million in a credit bid, with the rest due in cash. Some of the credit bid will repay certain debtor-in-possession facility claims. However, Soft Surroundings had $69 million in secured debt before filing bankruptcy. This means unsecured creditors won’t get any financial proceeds from the Coldwater Creek transaction.
Gordon Brothers “intervened early to avoid a full liquidation,” according to Kyle C. Shonak, senior managing director, transaction team and head of North America Lending for the global restructuring expert.
“We advised both companies and navigated the formal restructuring process to maximize the value of the assets in which the retailers, their employees and their stakeholders all benefited,” he added.
Coldwater Creek CEO David Walde credited Gordon Brothers for offering the capital, advice and expertise necessary to quickly hammer out a deal that would preserve needed jobs. What’s more, Walde indicated that the firm “ultimately change the lens in how we had initially approached the opportunity.”
Gordon Brothers gave Soft Surroundings a $17 million term loan to pursue the sale, and $18 million debtor-in-possession financing facility to fund the bankruptcy and reorganization.
Founded as a catalog company, Soft Surroundings sells apparel, accessories and home goods to upper-middle-class 60-something women, with two-thirds of 2022 revenue generated online. It was acquired by private equity firm Brentwood Associates in 2012. In July, it closed a Missouri distribution center and laid off 79 employees there before filing for Chapter 11 in a federal bankruptcy court.
But Soft Surroundings had already sewn up a deal with Coldwater Creek while the courts were processing the bankruptcy paperwork. The company closed its four dozen stores, terminating the nearly 450 employees who worked there.
For Coldwater Creek, the acquisition could validate its online model under the ownership of Newtimes Group. Launched in 1984, Coldwater Creek also has roots as a catalog retailer, and it knows a thing or two about bankruptcy. In 2014 it was preparing for its own Chapter 11 filing, which paved the way for the Sandpoint, Idaho-based retailer to be taken over by private equity firm Sycamore Partners. In its heyday, Coldwater Creek’s store base swelled to 334 locations, plus 31 factory outlets and seven day spas. Sycamore gave the retailer a digital-only reboot in November 2014. Coldwater Creek never reopened its 13 stores after the Covid-19 shutdown.
In July 2020, Sycamore shut down the e-tailer, which was snapped up by Newtimes five weeks later at an auction for $12.2 million. By December 2020, the site was back up and running, and Coldwater Creek, which targets Gen X women, started mailing catalogs again.
