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Hancock Fabrics stores to close by July 31

TUPELO — The liquidation of Hancock Fabrics is expected to be completed by July 31. That’s according to a filing with the Securities and Exchange Commission on Monday.

Great American Group of California is conducting the sale of merchandise — along with furniture, trade fixtures and equipment – at the company’s remaining 185 stores. Last Thursday, Great American’s bid for the rest of Hancock’s stores received approval from the U.S. Bankruptcy Court of Delaware. The company was already liquidating another 70 stores identified as underperforming during Hancock’s Chapter 11 filing in February.

The Northeast Mississippi Daily Journal reports the SEC filing reveals that Hancock will receive a guaranteed amount of at least 121.4 percent of the aggregate cost value of the merchandise sold. The ACV, according to the report, is between $61 million to $68 million. On Monday, Hancock was expected to receive a lump sum payment worth 90 percent of the ACV.

Hancock is to use the money to pay for expenses, such as salaries and utilities at the stores.

The remaining 10 percent goes to Great American as a fee.

“All proceeds of the sale of merchandise in excess of the guaranteed amount, the sale expenses and the fee will be shared equally by the company and Great American,” the court said.

In addition, Great American will receive a fee of 20 percent of the proceeds generated from the sale of any furnishings, trade fixtures and equipment. Great American also gets a fee of 5 percent of the gross proceeds from the sale of any merchandise that it supplies to augment sales at the Hancock stores. Great American also pays $638,000 to Hancock as minimum guaranteed gross receipts from the additional inventory it brought for the liquidation sales.

After those payments are made to Hancock, Great American will receive the remaining proceeds from the liquidation. Any merchandise not sold will become the property of Great American.

And while the liquidation is expected to be complete by July 31, there is a possibility that the sales can be extended, pending court approval.

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