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PUBLIC NOTICE OF SALE: KCP Advisory Group Announces Auction Sale Of Substantially All the Assets of Hot Shot HK, LLC, a Women’s Apparel Wholesaler as a Going Concern Pursuant to Section 363 of the Bankruptcy Code

(ASSETS SOLD FREE AND CLEAR OF LIENS)

OVERVIEW

Hot Shot HK, LLC (the “Company”) is a domestic wholesale supplier of apparel to retailers including specialty stores, department stores and off-price retailers marketing and selling fashion forward sportswear clothing under a number of trademarked names including: Hot Gal, Lemondrop, Double Click, Brat Star, Scream and Shout, Izzy and Me, Glamour and Co.

The Company is selling its assets through an auction under bankruptcy court approved bidding procedures.

Founded in 2011 and headquartered in the Garment district of New York City, the Company produces fashion forward women’s apparel, with all aspects of design and merchandising managed through their offices. The Company currently has the more than 50% of their manufacturing produced locally in NY to allow for quick lead time to meet orders shipping in the United Stated where more than approximately 95% of their customers are located. The Company leverages manufacturing parties in China for the remainder of their supply needs and has the capacity in their offices as well in order to generate test samples, typically within 24 hours of need. The Company is not locked into binding manufacturing contracts with these parties.

The Company’s revenues grew from $3.0 million in 2011 to approximately $26 million in 2015 and profitable earnings. In 2015 several of the Company’s major retail customers significantly reduced their purchases as a result of significant retailer store closings and their own chapter 11 bankruptcy filings. The loss on revenue led to working capital issues for the Company due to contractual costs that were unable to be negotiated.

The Company filed for protection under Chapter 11 of the United State Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York in February 2016 and has initiated plans to “right size” business operations and properly align overhead costs with current sales levels. The Company management believes that the business model is highly scalable and can facilitate future growth. With the proposed changes in place, the Company has conservatively projected positive earnings before interest, taxes and depreciation (“EBITDA”) for future years inline with pre-2015 history.

KEY CONSIDERATIONS

There are a number of key considerations for investment in the Company:
The Company’s pre-filing open orders were approximately $3.0 million and continue to be received post filing
The Company is operating as a going concern and continues to ship its customers
There is substantial backlog from notable retail customers
The Company maintains all design control and has 24-hour turnaround capability for sample manufacture
Potential interest of key personnel for continued employment
Owns a number of a trademarks
SALE PROCESS

The Company and related asset are available for sale through a court-supervised sale process. All assets are for sale including but not limited to Inventory, Accounts Receivable, Intellectual Property (trademarks, websites, customer lists), Fixed Assets and Cash.

Bid Deadline: 4/12/16 4:00PM
Auction Date: 4/13/16 3:00PM
Sale Hearing: 4/19/16 2:00PM

This process represents a significant opportunity to acquire and operate a design and distribution business that supplies to well-known top domestic retailers. Interested parties may receive further information, including access to a data room upon qualification and signing a confidentiality agreement.

Find out more at:

http://kcpadvisory.com/auction

 

Inquiries should be directed to:

Chris Creutz of KCP Advisory Group at
508.813.5607 or ccreutz@kcpadvisory.com

 

THIS DEAL WAS ADDED TO THE DAILY DAC OPPORTUNISTIC DEAL DATABASE ON 4/4/16. TO SEE MANY MORE DEALS INVOLVING FINANCIALLY DISTRESSED COMPANIES AND OTHER TIME SENSITIVE SITUATIONS, YOU CAN SUBSCRIBE HERE.

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The editors and editorial board of DailyDAC include preeminent restructuring and insolvency professionals, journalists, and editors. They are devoted to providing reliable and plain English education and deal intelligence about assignments, corporate bankruptcy, receiverships, out-of-court workouts and similar topics.

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