Joe's Investor Relations
Highlights | Board and Management | Committee Composition
Samuel J. (Sam) Furrow
CHAIRMAN OF THE BOARD
Samuel J. (Sam) Furrow has served as Chairman of our Board of Directors since October 1998. Mr. Furrow became a member of our Board of Directors in April 1998 and served as our Chief ... More
Marc B. Crossman
PRESIDENT AND CEO
Marc B. Crossman has served as our Chief Executive Officer since January 2006, our President since September 2004 and a member of our Board of Directors from January 1999 until July 2... More
CREATIVE DIRECTOR AND DIRECTOR
Joe Dahan has served as the president and head designer for our Joe’s Jeans subsidiary since its formation in February 2001, Creative Director and a member of our Board of Directors s... More
CEO OF HUDSON SUBSIDIARY & DIRECTOR
Peter Kim has served a member of our Board of Directors and the chief executive officer of our wholly owned subsidiary, Hudson Clothing Holdings, Inc., or Hudson, since our acquisitio... More
CHIEF FINANCIAL OFFICER
Hamish Sandhu has served as our Chief Financial Officer since August 2007. From January 2006 until August 2007, Mr. Sandhu was Chief Financial Officer of California Tan, Inc., a consu... More
Joanne Calabrese has served as a member of our Board of Directors since March 2012. Since 2007, Ms. Calabrese has served as the founder and owner of jcr3, a retail consulting firm s... More
I think Joes could go bankrupt and I have been around a long long time. Even if it gets resolved, that might only delay bankruptcy. The new terms of any credit agreement may mean no profits for a long time.
I agree about management. How do you know for certain the will not go bankrupt? In the press release they said the default would result in bankruptcy if it is not resolved. They cannot meet the terms of the debt agreement.
We don't know if Joes will go bankrupt or not. It's not clear how the breach will work out, Maybe Joes stock will test the all time lows before this is all over,
Triggering Events That Accelerate or Increase a Direct Financial Obligation or a
ITEM 2.04 Triggering Events That Accelerate or Increase a Direct Financial
Obligation or an Obligation under an Off-Balance Sheet Arrangement.
On November 6, 2014, Joe's Jeans Inc.'s ("we" or the "Company") received a notice of default and demand for payment of default interest (the "Letter") from Garrison Loan Agency Service LLC, as term loan agent (the "Agent"), under the term loan credit agreement entered into on September 30, 2013 (the "Term Loan Agreement"). In the Letter, the Agent provided notice that certain defaults and events of default under the Term Loan Agreement have occurred as a result of the failure of the Company to meet an EBITDA financial covenant for the twelve month period ended September 30, 2014. As a result of such default, the Agent reserved its rights to exercise any and all remedies available to it under the Term Loan Agreement and demanded payment of interest at the default rate of interest. As of September 30, 2014, there was $59,925,500.00 outstanding under the Term Loan Agreement. The default rate increases the current interest rate of 12 percent by two percent to 14 percent.
As a result of the default under the Term Loan Agreement, the Company is also in default under the terms of its revolving credit agreement and its factoring facility with CIT Commercial Services, Inc. ("CIT") each entered into on September 30, 2013. As of September 30, 2014, we had $33,931,000 outstanding and $13,733,000 of availability under the revolving credit agreement, which includes the Company's factoring facility. We have not received any written notice from CIT that it intends to exercise any of the remedies available to it under the revolving credit agreement or the factoring facility in connection with the events of default.
We are currently in discussions with the Agent and CIT regarding a resolution to the defaults, including amendments to the existing agreements and waivers for the defaults. There can be no assurance that that the requested relief will be granted on terms acceptable to us or at all. Unless the Company is able to secure a waiver, the Agent and CIT under the Term Loan Agreement, revolving credit agreement and factoring facility are entitled to, among other things, accelerate the outstanding amounts under those agreement. Any such acceleration under our credit facilities would have a material adverse effect on our liquidity, financial condition and results of operations, and could cause us to become bankrupt or insolvent, if not resolved.
Reasons To File Chapter 11 Bankruptcy
There are many reasons to file Chapter 11 and if the case is done properly and timely Chapter 11 can be the most beneficial move a business can make or in some situations it may be the only way to save an otherwise doomed business.
Chapter 11 cases are filed for many reasons but some of the most frequent situations involve stopping foreclosures on valuable property, restructuring debt over a longer period of time to trim immediate expenses, or to cure tax debt over time.
Generally speaking, a Chapter 11 is a reorganization of your financial affairs without borrowing any money. It may allow you to stop foreclosures, repossessions, tax levies, IRS seizures, and other creditor actions, by allowing you to set up a court enforced repayment plan. Immediately upon filing, the court will order an automatic stay against your creditors, to allow you some breathing time to concentrate on operating your business, and restoring its profitability and cash flow.
What Happens When You File Chapter 11 Bankruptcy
Essentially what happens upon filing the petition, is that you immediately stop paying all unsecured debt, including taxes. You will, or may continue paying reduced secured obligations, depending on what your situation and ultimate plan is. You may pick and choose which secured creditors to pay, and you can surrender unprofitable secured property and/or leases.
Many multi-location Debtors utilize Chapter 11 to close unprofitable locations, without being stuck for the full measure of breach of lease damages allowed under state law. The damages allowed for breach of leases are limited in a Chapter 11 proceeding.
This moratorium on paying unsecured debt continues until after you have a plan voted on by creditors and confirmed by the court. This almost always takes at least 6 months or more, and commonly takes a year or more before you commence making payments pursuant to your plan. In some cases, it can take even longer.
mpoklink, the problem is we cannot have any trust that Joes management will get themselves out of this situation with the lenders. What the lenders will accept is unclear and no communications from Joes about what is going on or any possible solutions.
Thank you, yes I read your post. I have seen gemsarered post here along with You gemsaregreen and remember some of the posts.
Gems, have you given up on a recovery? I found one bright spot, the number of institutional holders increased from 25 to 26 after the default announcement. Together they hold 12% of the stock.
At the deep end of the pool, there is still the possibility of bankruptcy as a way out of the debt. Could that happen?
A deal with the debt holders will probably include raising the interest rate from 12% to 14%. That's going to increase the payments on the debt. What will it do to potential profits? A long way to go before Joes is out of the woods.