SOURCE: RedEnvelope, Inc.

April 24, 2008 18:24 ET

U.S. Bankruptcy Court Issues Order in RedEnvelope, Inc. Chapter 11 Case

SAN FRANCISCO, CA--(Marketwire - April 24, 2008) - RedEnvelope, Inc. (PINKSHEETS: REDE) today announced that in connection with its Chapter 11 case pending before the United States Bankruptcy Court in San Francisco, the Bankruptcy Court issued an order on April 22, 2008 granting authority to RedEnvelope, Inc. (the "Company") to enter into the $4.5 million debtor-in-possession credit facility and loan agreement by and among the Company, Granite Creek Partners Agent, LLC, as agent, Creative Catalogs Corporation ("Creative Catalogs") and Granite Creek FlexCap I, L.P. as the lenders and approving certain asset sale procedures, which among other things, identifies Creative Catalogs as the stalking horse bidder.

In addition, the Bankruptcy Court revised the sale procedures as previously disclosed in the Company's press release dated April 18, 2008 and in the Asset Purchase Agreement by and between the Company and Creative Catalogs dated April 17, 2008. Notably, the Bankruptcy Court capped the breakup fee at 4.5% of the cash consideration of $5.7 million, eliminated the 2% expense reimbursement provision, and also changed the initial overbid amount from $500,000 to $350,000.

"We are pleased that the decision made by the Bankruptcy Court yesterday will allow us more than adequate financing for the coming weeks and will allow us to return to business and payment as usual. In addition, we believe that this process will allow us to maximize the return for existing creditors," said Phil Neri, the Company's Chief Financial Officer.

The Bankruptcy Court has scheduled the sale hearing and auction of the Company's assets for May 27, 2008 at 9:30 a.m. A final Bankruptcy Court order regarding sale procedures is expected to be issued on or about Monday, April 28, 2008. Those interested in submitting bids should contact the Company in writing at 149 New Montgomery Street, San Francisco, CA 94105. For information regarding the Company, the auction or the bankruptcy filing please contact the Company's Chief Restructuring Officer, A. Stone Douglass, at (415) 512-6122.

About RedEnvelope, Inc.

RedEnvelope, Inc. is a retailer dedicated to inspiring people to celebrate their relationships through giving. RedEnvelope offers an extensive collection of imaginative gifts through its webstore, www.RedEnvelope.com.

"RedEnvelope" is a registered trademark of RedEnvelope, Inc.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements contained in this press release include statements which may be preceded by the words "plan," "will," "expect," "believe," or similar words. Such statements are based upon current expectations and involve risks and uncertainties. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. Factors that could affect future performance include, but are not limited to the Company's ability to: operate pursuant to the terms of the DIP Agreement; fund its working capital needs through the expiration of the DIP Agreement; obtain final Bankruptcy Court approval of the sale procedures and Asset Purchase Agreement; consummate the Asset Purchase Agreement in a timely manner; complete the Chapter 11 process in a timely manner; continue to operate in the ordinary course and manage its relationships with its creditors, noteholders, vendors, employees and customers given the Company's financial condition; limit the amount of time the Company's management and officers devote to restructuring, in order to allow them to run the business, and retain a number of its key managers and employees, and other risk factors described in detail in our Report on Form 10-K for the fiscal year ended April 1, 2007 and Quarterly Report on Form 10-Q for the period ended December 30, 2007, including, without limitation, those discussed under the caption, "Risk Factors," which documents are on file with the Securities and Exchange Commission (the "SEC") and available at the SEC's website at www.sec.gov. These forward-looking statements are made only as of the date of this press release, and RedEnvelope undertakes no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. The lack of any update or revision is not intended to imply continued affirmation of forward-looking statements contained herein.

Contact Information

  • Media Contact:
    Stone Douglass
    Company's Chief Restructuring Officer
    (415) 512-6122