Mrs. Field's files for Chapter 11 bankruptcy

by Eric Schroeder
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SALT LAKE CITY, UTAH — Mrs. Field’s Original Cookies, Inc. on Aug. 24 filed for Chapter 11 bankruptcy. The company, which filed a prepackaged plan of reorganization, said it plans to emerge from bankruptcy within 45 days.

The announcement comes a little more than a week after Mrs. Field’s filed its intent to seek bankruptcy protection with the Securities and Exchange Commission.

In a prepackaged bankruptcy, creditors vote on terms of the reorganization before the bankruptcy filing, allowing the company to emerge from Chapter 11 faster. Creditors must vote by Sept. 15.

Mrs. Fields said the prepackaged bankruptcy will improve the company’s balance sheet by exchanging approximately $195 million in bondholder debt for cash, new bonds and a controlling equity stake in the reorganized company. Debt is expected to be reduced by about $145 million, Mrs. Field’s said.

In its Aug. 15 S.E.C. filing, Mrs. Fields listed total debt as of June 28 at $202.2 million and total cash at $97.8 million for a net debt of $104.4 million. After factoring in members’/shareholders’ deficit of $120.4 million, the company had a negative total book capitalization of $16 million.

Mrs. Fields also noted in the filing that after a careful review of operations it determined that reorganization would be preferred to selling its assets.

"The company believes that its businesses and assets have significant value that would not be realized in a liquidation, either in whole or in substantial part," Mrs. Fields said. "Consistent with the liquidation analysis described herein and other analyses prepared by the company and its advisers, the value of the company’s assets would be considerably greater if the company operates as a going concern instead of liquidating. Moreover, the company believes that any alternative to confirmation of the plan, such as an out-of-court restructuring, liquidation, or attempts by another party in interest to file a plan of reorganization, would result in significant delays, litigation, and additional costs, and ultimately would lower the recoveries for holders of allowed claims and interests."

Mrs. Field’s through its franchisees’ retail stores is one of the largest retailers of freshly baked, on-premises specialty cookies and brownies in the United States and the largest retailer of soft-serve frozen yogurt with live active cultures in the United States through its TCBY brand.

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