TUPELO — Hancock Fabrics owes nearly $84 million to three secured creditors who have first dibs on any proceeds coming from the liquidation of its stores.
The Northeast Mississippi Daily Journal reports unsecured priority creditors next in line are owed nearly $4 million, while non-priority unsecured claims total more than $26 million.
It’s the last group of creditors most likely not to see much, if any, of the money they’re owed.
For example, there’s V.M. Cleveland, a developer and owner of the Tupelo Furniture Market. He also owns the Tupelo Commons retail development, which is home to Best Buy, Ashley HomeStore and several other stores and restaurants. Hancock has leased space at Tupelo Commons since about 2005. When Hancock filed for Chapter 11 reorganization on Feb. 2, it owed Cleveland nearly $19,000.
“You never really know how it’s going to work out,” he said. “You might get a nickel for every dollar that’s owed or an even smaller percentage, but I really don’t expect any.
“But what gets me is all the lawyers involved will get their money right away.”
Hancock’s top three secured creditors have provided financing for the company. Wells Fargo is owed the largest chunk, more than $57 million, followed by GACP Finance ($18.3 million) and Deutsche Bank ($8.4 million).
Among the unsecured priority claims – these creditors are next in line following the secured creditors – the city of Baldwyn is owed more than $157,000 in real estate taxes, plus nearly $2,000 in personal property taxes. Lee County is owed more than $127,000 in real estate taxes.
Joining Cleveland in the group of non-priority unsecured creditors is Prentiss County Electric Power Association; it is owed nearly $105,000.
PCEPA General Manager Ronny Rowland said the electric cooperative’s customers don’t have to worry about footing the bill.
“We have a surety bond that can take care of that,” he said. “We’ve done that for larger customers for a long time.”
A surety bond assures a creditor will get at least a portion of the money it is owed. While Rowland isn’t sure what will happen with Hancock this time around, he said the company made good on its debt nine years ago when it filed Chapter 11 for the first time.
“I have to give them credit – they owed us more than $40,000, and when they got out of bankruptcy, they paid it all back,” he said.
But the issue this time is that Hancock will be liquidating and won’t reemerge.
The liquidation is expected to be completed by July 31.
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