Eddie Bauer - Chapter 11 Case Summary

Business Description

Eddie Bauer LLC (together with its affiliated debtors and debtors in possession, the "Company" or the "Debtors") is the exclusive licensee of the Eddie Bauer brand for brick-and-mortar retail sales in the United States and Canada. The Company does not own the Eddie Bauer brand itself; the brand, along with wholesale and e-commerce sales rights thereunder, is not part of these chapter 11 cases.

• Founded over 100 years ago in 1920, Eddie Bauer has evolved from an outdoor performance pioneer — whose goose down technology outfitted U.S. military forces in World War II and accompanied Jim Whittaker on the first American ascent of Mount Everest — into a broad-based retailer of casual garments and home goods.
• The Company's product offerings span men's and women's shirts, pants, footwear, accessories, bags, camping gear, and its signature outerwear line.

As of the Petition Date, the Company operated 175 retail locations across 40 U.S. states and six Canadian provinces, employing approximately 2,200 people. The Company sells products under the Eddie Bauer name in three primary categories:

• Sportswear (~72% of sales): A broad spectrum of men's and women's clothing, including pants, shorts, shirts, light hoodies, and jackets. Men's sportswear alone accounts for approximately 40% of all sales, making it by far the Company's most significant revenue driver.
• Outerwear (~19% of sales): The Company's signature down jacket offerings, along with other coats, jackets, snowpants, and boots.
• Gifts, Gear, Accessories, and Footwear (~9% of sales): A catch-all category encompassing hats, gloves, belts, boots, shoes, blankets, bags, and backpacks.

Historically, the Company maintained three primary sales channels: e-commerce (~34% of FY 2025 sales), wholesale (~24%), and brick-and-mortar retail (~42%). In FY 2025, the Company's brick-and-mortar and e-commerce channels generated approximately $440 million in gross sales. However, the Company terminated its rights to operate the e-commerce and wholesale channels effective January 31, 2026, as part of a License Termination Agreement with Authentic Brands Group, LLC ("ABG"), which owns the Eddie Bauer intellectual property.

• Since entering into the License Termination Agreement, the Company has substantially slimmed down its operations. Leases for 49 unprofitable stores were not renewed, and store closing sales commenced at the remaining 175 locations between January 26 and February 7, 2026.
• Store closing sales are expected to continue throughout these chapter 11 cases for any stores not sold as part of a going-concern transaction.

The Company currently operates under the Catalyst Brands ("Catalyst") umbrella, alongside several other major American retail brands. ABG licenses the North American brick-and-mortar retail rights for the Eddie Bauer brand to the Company.

---

Corporate History

The Eddie Bauer story began in 1920, when Mr. Bauer opened "Eddie Bauer's Tennis Shop" in Seattle, Washington, in the back of a local hunting and fishing store, initially specializing in building and repairing tennis gear. Over the next five decades, Eddie Bauer pioneered goose down garments — first patenting the technology in 1940 for the iconic Skyliner jacket — outfitted the U.S. military during World War II, and equipped some of the most daring mountain expeditions in history, including the earliest ascents of K2, the Vinson Massif, and Mount Makalu.

Early Ownership Changes (1968–1988)

• After nearly five decades at the helm, Mr. Bauer sold his stake to business partner William F. Niemi and his son in 1968. The Niemis re-entered the brick-and-mortar retail market by opening a storefront in San Francisco but soon sold the Company to General Mills in 1971.
• Under General Mills' ownership (1971–1988), the Company expanded its catalog and wholesale business, added more casual clothing to its traditional outdoor performance offerings, and fostered cross-branding partnerships, including the "Eddie Bauer Edition" of Ford vehicles beginning in 1983. By 1988, the Company maintained approximately 60 retail locations across the United States and Canada.

Spiegel Era and Rapid Expansion (1988–2003)

• General Mills sold the Company to catalog sales company Spiegel Inc. in 1988. Despite Spiegel's particular focus on catalogs, nearly all facets of Eddie Bauer's business grew substantially under its ownership.
• True to its history of innovation, the Company became one of the earliest adopters of e-commerce when its website went live in 1996, just three years after the world wide web became widely available to the public.
• By 2002, the Company had amassed nearly 400 retail locations and over 100 outlet stores, expanded internationally with retail locations in Japan and Germany, introduced a catalog offering in the United Kingdom, and added home furnishing product lines.

First Chapter 11 — Spiegel Bankruptcy (2003)

• In response to declining sales and mounting credit card defaults from Spiegel's unrelated high-risk consumer lending operation, Spiegel and its affiliates (including Eddie Bauer) filed for chapter 11 on March 17, 2003, in the U.S. Bankruptcy Court for the Southern District of New York.
• On June 21, 2005, Eddie Bauer emerged as a standalone company for the first time in 34 years, with ownership distributed to certain creditors of the Company's prepetition lenders. The Company subsequently began trading on the NASDAQ in October 2006 under the symbol EBHI.

Second Chapter 11 and Golden Gate Capital Acquisition (2009)

• This independent existence was short-lived. Significant macroeconomic headwinds from the 2008 financial crisis, coupled with additional debt obligations incurred following the Spiegel Bankruptcy, forced the Company to file for chapter 11 on June 17, 2009, in the U.S. Bankruptcy Court for the District of Delaware.
• Eddie Bauer was sold out of those cases to Golden Gate Capital, which owned and operated the business for approximately 12 years.

SPARC Acquisition and Catalyst Formation (2021–Present)

• In 2021, SPARC Group Holdings LLC ("SPARC") acquired Eddie Bauer's operating business, while an affiliate of ABG acquired the Eddie Bauer intellectual property through a series of related transactions.
• In January 2025, Penney Holdings LLC, the parent of JCPenney, acquired 100% of SPARC's equity in an all-equity transaction. The ultimate parent company of the combined entities is primarily owned by Simon Property Group, Brookfield Corporation, and ABG.
• The parent company of the combined entities currently owns and operates the Company alongside several other major American retail brands under the Catalyst Brands trade name.

Organizational Structure

The Company's organizational structure includes both U.S. and Canadian entities. Key Debtor entities include Eddie Bauer LLC, which holds five leases in New Jersey — including locations at the American Dream Mall in East Rutherford and the Westfield Garden State Plaza in Paramus — and 13051269 Canada Inc., whose sole U.S. asset is a bank account located in Lyndhurst, New Jersey.

---

Operations Overview

The Company operates 175 brick-and-mortar retail locations across 40 U.S. states and six Canadian provinces, employing approximately 2,200 people. Approximately 50% of all inventory sold by the Company is imported through the Port of Newark, New Jersey.

Shared Services and Management Support

Since the 2021 SPARC Acquisition, the Company has received approximately $215 million in financial support from SPARC and has benefited from the broader resources of the Catalyst organization. Under a shared services arrangement, SPARC and Catalyst have provided a wide array of operational and administrative support, including:

• Direct Expense Coverage: SPARC directly pays for and manages many of the Company's administrative functions, including employee wages, employee benefits, and corporate insurance procurement.
  • SPARC also remits funds to the Company on an as-needed basis to cover additional expenses, such as merchandise purchases from suppliers.
• Management Services: Certain Catalyst employees — many of whom have substantial industry expertise as retail executives — perform management and oversight functions for the Company, for which the Company pays SPARC a monthly Management Fee.
• Economies of Scale: By outsourcing accounting, treasury management, IT services, and marketing programs to Catalyst, the Company shares personnel costs with other Catalyst brands and benefits from preferential pricing on certain goods and services negotiated across the Catalyst family.

In the ordinary course of business, the Company has historically transferred excess funds generated by its operations, if any, to SPARC on a weekly basis via intercompany transfers. The shared services arrangement has enabled the Company to preserve liquidity and meet obligations to third parties even amid an ongoing acute liquidity shortage.

---

Prepetition Obligations

As of the Petition Date, the Debtors report approximately $1.7 billion in aggregate outstanding principal and accrued interest across their funded debt obligations. The Company's prepetition capital structure comprises an asset-based revolving facility, a term loan, and a subordinated loan—all secured by substantially all of the Debtors' assets—as well as a significant intercompany payable. The borrower entities (Penney Holdings LLC, Penney Borrower LLC, Penney OpCo LLC, and SPARC Group LLC) allocate proceeds of the prepetition loan facilities to the Debtors and other Catalyst brands through a series of ordinary-course intercompany arrangements, with operational shortfalls funded by periodic draws on the ABL Facility.

ABL Facility

• Approximately $728 million in unpaid principal and accrued interest is outstanding under a revolving credit facility of up to $1.75 billion, with Wells Fargo Bank, National Association serving as administrative agent.
  • Interest accrues at SOFR plus 2.50% per annum, subject to step-downs to 2.25% and 2.00% based on quarterly average excess availability, and is paid in cash.
  • The facility matures on September 19, 2030, and is secured by liens on substantially all assets of the ABL parties.
  • In addition, approximately $196.8 million in letters of credit are outstanding under the facility, each accruing a letter of credit fee that varies based on whether it is a standby or trade letter of credit.
  • All U.S. Debtors and Canadian Debtors guarantee obligations under the ABL Facility, though the Canadian Debtors' guarantee is limited to $6.4 million.

Term Loan Facility

• Approximately $600 million in unpaid principal is outstanding under a term loan facility agented by WhiteHawk Capital Partners LP.
  • Interest accrues at SOFR plus 6.75% per annum and is paid in cash.
  • The facility matures on September 19, 2030, and is secured by liens on substantially all assets of the term loan parties.
  • Only the U.S. Debtors serve as guarantors under the Term Loan Facility.

Subordinated Loan Facility

• Approximately $216.2 million in unpaid principal is outstanding under a subordinated term loan facility agented by Copper Retail JV LLC.
  • Interest accrues at a rate of 15.0% per annum on a compounding basis and, at the election of the lead administrative borrower, may be paid in kind.
  • The facility matures on February 19, 2031, and is secured by liens on substantially all assets of the subordinated loan parties.
  • Only the U.S. Debtors serve as guarantors under the Subordinated Loan Facility.

Intercreditor Agreements

• The prepetition lenders are party to two intercreditor agreements that delineate collateral and payment rights among the secured creditor groups:
  • The ABL-Term Intercreditor Agreement, dated September 19, 2025, allocates payment and collateral priority as between the ABL Lenders and Term Loan Lenders, distinguishing between ABL Priority Collateral and Term Loan Priority Collateral.
  • The Subordinated Intercreditor Agreement, also dated September 19, 2025, expressly subordinates the Subordinated Loan Agent to both the ABL Agent and Term Loan Agent in lien and payment priority.

SPARC Intercompany Payable

• As of the Petition Date, the Debtors have accrued an intercompany payable to SPARC totaling approximately $215 million.
  • The payable represents the cumulative shortfall between the Debtors' accrued obligations to SPARC—on account of covered expenses and management fees—and the aggregate funds actually transferred to SPARC over the approximately five-year period since the SPARC Acquisition.
  • The covered expenses, transfers, and intercompany payable are recorded in the Debtors' centralized account system, monitored closely, and reconciled on a monthly basis.

---

Events Leading to Bankruptcy

Macroeconomic Headwinds and Deteriorating Retail Environment

• Following the 2021 SPARC Acquisition, Eddie Bauer initially benefited from COVID-19-era tailwinds—surging demand for outdoor apparel, a roughly 44% expansion of the outdoor equipment market between 2019 and 2021, and elevated consumer discretionary spending fueled by federal relief programs. The Company posted positive EBITDA of $21 million during the final eight months of fiscal year 2021 while capturing operational savings through cost-cutting measures.
  • However, these favorable conditions proved unsustainable. Beginning in 2023, consumer demand declined well below historical trends, mirroring a broader downturn across the outdoor retail sector. Trailing twelve-month revenue fell 19% compared to fiscal year 2022, and gross margins compressed by approximately 9.5 percentage points over the same period.
  • Persistent post-pandemic supply chain disruptions drove up the cost of materials, labor, and fuel, while a historic rise in inflation further increased the Company's cost of doing business.
  • The long-standing "de minimis" tariff exemption—which allowed non-U.S. online retailers to import goods valued under $800 duty-free—enabled foreign competitors to significantly undercut domestic retailers like Eddie Bauer that were required to pay full import duties. Although the exemption was suspended in August 2025, its damage had already been inflicted. Subsequent reciprocal tariffs further elevated import costs and continued to erode margins.
• The cumulative impact of these headwinds was severe. The Company recorded negative earnings of approximately $2 million in 2022, $10 million in 2023, $82 million in 2024, and $80 million in 2025—totaling more than $172 million in losses over the last three fiscal years. Approximately 21 retail companies with liabilities of at least $100 million filed for chapter 11 during the same period, underscoring the breadth of the industry downturn.

Pursuit of Operational Alternatives

• Before resorting to a chapter 11 filing, the Debtors exhausted all available alternatives in an effort to maximize stakeholder value:
  • The Company implemented a variety of operational cost-cutting measures aimed at addressing its sizable operating expenses and improving profitability.
  • In January 2025, the Company appointed Ken Ohashi as its new Chief Executive Officer and undertook additional leadership changes.
  • The Debtors evaluated and modified their merchandising strategy and exited certain unprofitable store locations.
  • Throughout this period, SPARC continued to fund the Company's operations through intercompany loans, resulting in an intercompany payable of approximately $215 million as of the Petition Date.

The License Termination Transaction

• Under the License Agreement executed as part of the SPARC Acquisition (effective May 6, 2021), the Company licensed the Eddie Bauer intellectual property from ABG for use across its e-commerce, wholesale, and brick-and-mortar retail channels. In exchange, the Company paid percentage-based fees on net sales, a guaranteed minimum royalty ("GMR"), and an annual marketing fee—both of which accrued regardless of sales performance. The initial term ran through January 31, 2032, representing approximately $220 million in future fixed fee obligations.
  • By late 2025, sales had declined to a level that could no longer support payment of the fixed licensing fees. The wholesale business had become unprofitable, and the e-commerce channel was only marginally profitable.
  • Following good-faith, arm's-length negotiations overseen by the Disinterested Directors, the Company and ABG entered into a License Termination Agreement containing several key terms:
    • The wholesale and e-commerce rights were mutually terminated and transferred to Outdoor 5, LLC ("O5"), a non-debtor entity, in exchange for the elimination of the GMR and annual marketing fee—saving the Debtors approximately $220 million over the remaining license term.
    • The Company retained its exclusive right to operate brick-and-mortar retail locations and sell merchandise under the Eddie Bauer brand, subject only to actual and accrued royalties.
    • A one-year sell-off period permitted the Company to sell existing e-commerce and wholesale inventory through its retail stores or wholesale relationships in the U.S. and Canada.
  • The License Termination Agreement became effective on January 31, 2026. To effectuate the transition, the Company negotiated a series of formal agreements with O5 covering the transfer of inventory, allocation of liabilities, treatment of employees, and provision of transition services.

Advisor Retention and Corporate Governance

• As financial challenges deepened, the Company assembled a team of restructuring professionals:
  • Kirkland & Ellis LLP was retained as legal counsel on September 30, 2025, followed by Berkeley Research Group, LLC ("BRG") as financial advisor on October 8, 2025.
  • Reevemark, LLC was engaged on October 14, 2025 as communications consultant; SOLIC Capital Advisors, LLC was retained on November 24, 2025 as investment banker.
  • In preparation for the chapter 11 filing, Cole Schotz P.C. was retained on January 12, 2026 as co-counsel and conflicts counsel; Osler, Hoskin & Harcourt LLC was retained on January 15, 2026 as Canadian counsel; and Stretto, Inc. was appointed on January 22, 2026 as claims and noticing agent.
  • On January 29, 2026, Hilco Merchant Resources, LLC and SB360 Capital Partners, LLC were retained to assist with the wind-down of the Company's retail operations. On January 31, 2026, Stephen Coulombe and George Pantelis were appointed as Co-Chief Restructuring Officers.
• In parallel, the Company proactively strengthened its governance framework:
  • On October 3, 2025, Jeffrey Stein and Anthony Horton were appointed as Disinterested Directors of the U.S. Debtors, with binding decision-making authority over matters involving potential conflicts of interest between the Company and its related parties. On February 5, 2026, the Disinterested Directors were appointed to the boards of the Canadian Debtors.
  • With the assistance of Cole Schotz, the Disinterested Directors launched an Independent Investigation into potential claims or causes of action that the Debtors may hold relating to insiders and affiliated entities. The investigation—which encompasses a comprehensive review of over 36,399 pages of diligence materials—remains ongoing as of the Petition Date.

Store Closing Sales and Going Concern Sale Process

• In addition to the License Termination, the Debtors initiated store closing sales across all locations, with the sales expected to continue postpetition for approximately thirteen additional weeks. The proceeds and associated labor cost savings are expected to provide much-needed liquidity to fund the chapter 11 cases. The Debtors retained the Liquidator after evaluating multiple national liquidation firms.
• On November 24, 2025, the Company retained SOLIC to develop and conduct a Going Concern Sale Process for all or substantially all of the Company's remaining brick-and-mortar retail operations:
  • SOLIC contacted 126 potential acquirers—68 financial and 58 strategic counterparties with investments and/or operational experience in the consumer retail space.
  • 34 parties executed non-disclosure agreements and accessed a virtual data room containing detailed diligence materials.
  • Following a formal process letter distributed on January 16, 2026, the Company received two indications of interest by the January 30, 2026 deadline. While these IOIs have not yet resulted in a binding proposal, the Company and its advisors continue to negotiate with the interested parties to pursue a potential going-concern transaction.
• To complement these efforts, the Company also retained RCS Real Estate Advisors to analyze its lease portfolio and identify optimization opportunities.

The Restructuring Support Agreement

• In January 2026, it became clear that a comprehensive restructuring was necessary—particularly after SPARC signaled its intention to cease funding the Debtors' operations imminently. The Debtors, with the assistance of their advisors, engaged in hard-fought, arm's-length negotiations with their Prepetition Lenders, culminating in a Restructuring Support Agreement ("RSA") backed by 100% of the ABL Lenders, Term Loan Lenders, and Subordinated Loan Lenders.
  • The RSA contemplates two interlocking processes:
    • The completion of one or more going-concern sales of the Debtors' assets, free and clear of all liens and encumbrances, to the highest or otherwise best bidder(s).
    • An orderly, value-maximizing wind-down of all remaining brick-and-mortar retail operations not sold in a going-concern transaction, subject to court-approved store closing procedures.
  • Under the RSA, the Debtors' entire funded-debt capital structure—comprising approximately $1.7 billion of senior secured debt—has committed to support a chapter 11 plan. Key distribution terms include:
    • All allowed administrative and priority claims will be paid in full.
    • 100% of Net Proceeds (from going-concern and store-closing sales) will be distributed to ABL Lenders, less a GUC Contingent Recovery Pool.
    • The greater of (i) 10% of Net Proceeds in excess of a threshold recovery amount for ABL Lenders and (ii) $250,000 will be distributed to holders of general unsecured claims, provided the unsecured class votes to accept the Plan. To facilitate this recovery for unsecured creditors, holders of Term Loan Claims, Subordinated Term Loan Claims, and existing equity interests have agreed to forego distributions they would otherwise be entitled to receive.
  • The RSA provides for funding the restructuring through consensual use of cash collateral, proceeds from ordinary-course operations and store closing sales, and proceeds from any going-concern sale—eliminating the need for debtor-in-possession financing.
• On February 8, 2026, the Debtors and Prepetition Lenders executed an Amendment and Forbearance Agreement ensuring that the chapter 11 filing would not trigger cross-default provisions across the broader Catalyst enterprise. The Canadian Debtors also agreed to provide a limited, secured guarantee of up to $6.4 million of ABL Facility obligations.

Chapter 11 Milestones and Path Forward

• The RSA establishes an aggressive timeline to minimize administrative costs and maximize estate value:
  • Petition Date no later than February 9, 2026.
  • Interim cash collateral order within 5 days of filing; final order within 40 days.
  • Chapter 11 plan and disclosure statement to be filed within 14 days of the Petition Date.
  • Going-concern bid deadline on or around March 3, 2026; auction (if necessary) on or around March 6, 2026; sale hearing on or about March 12, 2026.
  • Disclosure statement approval within 35 days; plan confirmation within 70 days; plan effective date within 75 days of the Petition Date.
• The Debtors entered chapter 11 with the unanimous support of their funded-debt creditors, pursuing a dual-track strategy: continuing the Going Concern Sale Process to identify a buyer for all or part of the Company's remaining retail operations, while simultaneously conducting an orderly wind-down of any unsold assets. The Company believes this framework will maximize value for all stakeholders and position the Debtors on the strongest footing for a potential going-concern outcome.