UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA
JACKSONVILLE DIVISION www.flmb.uscourts.gov In re
STEIN MART, INC., et al., Debtors.*
/
Case No. 3:20-bk-02387 Chapter 11
(Jointly Administered)
STIPULATION BETWEEN THE DEBTORS AND
SYNCHRONY BANK REGARDING CREDIT-CARD PROGRAM
Stein Mart, Inc. (“Stein Mart”) and its affiliated debtors and debtors-in-possession (the
“Debtors”) and Synchrony Bank (“Synchrony”) stipulate and agree as follows.
1. The Debtors are in the business of selling consumer goods at retail.
2. On August 12, 2020 (the “Petition Date”), the Debtors filed voluntary petitions
for relief under chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Middle District of Florida (the “Court”), opening three cases (the “Cases”) that are jointly administered
under case number 3:20-bk-02387.
3. Synchrony establishes programs to extend and service bank-card and private-label credit programs to qualified consumer customers for the purchase of products from various merchants.
4. Stein Mart and Synchrony are parties to the Amended and Restated Co-Brand and Private Label Credit Card Consumer Program Agreement dated as of February 24, 2016 (as amended, the “Program Agreement”). Pursuant to the Program Agreement, Synchrony provides
a co-brand credit-card revolving consumer-credit program and a private-label revolving
* The tax identification numbers of the Debtors are as follows: Stein Mart, Inc. 6198; Stein Mart Buying Corp. 1114;
consumer-credit program (collectively, the “Program”) to qualified consumer customers of the
Debtors.
5. In connection with the Cases, the Debtors announced their intention to sell substantially all of their assets, including through liquidation sales conducted at their retail outlets.
6. Although Synchrony asserts that it is not obligated under the Program Agreement to advance credit in connection with liquidation or going-out-of-business sales or to process returns, it is willing to continue to provide the Program and to make credit available to qualified consumer customers of the Debtors during the liquidation of the Debtors’ assets, subject to the terms and conditions of this stipulation and its approval by the Court.
Synchrony and the Debtors accordingly agree as follows, and the Court hereby ORDERS:
7. The Debtors are authorized to honor, perform under, and otherwise satisfy their obligations in connection with the Program Agreement, whether arising pre-petition or post-petition, including, without limitation, permitting and effecting any rights of setoff or recoupment thereunder and turning over to Synchrony any in-store payments made on credit cards issued under the Program Agreement; provided, however, for the sake of clarity, that except as expressly permitted in paragraph 8, Synchrony is not allowed to effectuate any setoff or recoupment of any pre-petition debts owed by the Debtors to Synchrony without the consent of the Debtors or a further order of the Court.
ordinary course for goods financed through Cards and transmit the resulting charge transaction data to a bank each day in accordance with the terms of the Program Agreement; and (b) Synchrony shall continue authorizing transactions and processing settlement payments to the Debtors in the ordinary course and pursuant to the Program Agreement. Such settlement payments shall continue to be paid on a net basis, after deducting for any pre- and post-petition credits/returns, pre- and post-petition chargebacks, pre- and post-petition in-store payments, and reserves authorized under this stipulation.
9. Effective as of August 13, 2020, the Debtors shall not accept applications for new Cards or applications to make changes to the lines of credit available to customers under or in connection with the Cards.
10. Effective as of August 17, 2020, or such other date as may be agreed by Synchrony and the Debtors, the Debtors shall not accept any payments tendered by Card customers to the Debtors in satisfaction of outstanding balances on such Card customers’ accounts. The Debtors shall give notice to its customers through prominent signage located in its retail outlets and on its web site (including the Debtors’ frequently asked questions page), notifying customers to direct such payments to Synchrony. If, notwithstanding the foregoing prohibition, the Debtors accept or come into possession of any such payment, it shall: (a) not be deemed to be property of the Debtors’ estates; (b) be held by the Debtors in trust for Synchrony; and (c) be delivered by the Debtors to Synchrony promptly after receipt in accordance with the Program Agreement.
Cards. Synchrony shall distribute rewards certificates for points earned before that date, which customers may use until the earlier of the date of their expiration and September 12, 2020.
12. Synchrony may retain as reserves $210,000 in pre-petition settlements arising before the Petition Date. In addition, Synchrony may deduct $25,000 out of each day’s post-petition settlement until the amount of total post-post-petition reserves reach $500,000. Synchrony may hold those reserves and apply them against the cost of any uncompensated returns, chargebacks, and other damages incurred by Synchrony, except that reserves associated with transactions arising after the Petition Date shall only be applied by Synchrony against the cost of any uncompensated returns, cancellation of services, and chargebacks that arise in the ordinary course. Synchrony shall return to the Debtors any un-applied reserves no later than January 1, 2021. Synchrony reserves the right to seek payment, as an administrative expense, for any returns, cancellation of services, or chargebacks pursuant to the Program Agreement in connection with post-petition transactions to the extent not covered by reserves, and the Debtors reserve the right to challenge or object to any request by Synchrony.
14. Nothing in this stipulation shall be construed to constitute an assumption of the Program Agreement by the Debtors pursuant to section 365 of the Bankruptcy Code, including any of the Debtors’ obligations to reimburse Synchrony for unamortized bonus payments, which will be treated as part of Synchrony’s rejection damages.
15. The Program Agreement is deemed rejected pursuant to section 365 of the Bankruptcy Code effective as of the earlier of: (a) the date that the Debtors close their last physical store; and (b) October 31, 2020. Synchrony shall retain its rights under its license under the Program Agreement to use the Debtors’ intellectual property to engage in collection activities and to communicate with cardholders as provided for in the Program Agreement and pursuant to section 365(n) of the Bankruptcy Code and other applicable law, notwithstanding the rejection of the Program Agreement or a sale of the Debtors’ property. Rejection of the Program Agreement shall not affect the rights and obligations of the parties under this stipulation and order.
DATED this 11th day of September 2020.
Respectfully submitted, FOLEY & LARDNER LLP
/s/ Gardner F. Davis Gardner F. Davis (FL 0471712) Telephone: 904.359.8726 Email: [email protected] John J. Wolfel (FL 30664) Telephone: 904.359.8778 Email: [email protected] Neda A. Sharifi (FL 112172) Telephone: 904.359.8719 Email: [email protected] Richard E. Guyer (FL 1004150) Telephone: 904.633.8902 Email: [email protected] One Independent Drive, Suite 1300 Jacksonville, FL 32202-5017 and
Mark J. Wolfson (FL 0352756) Foley & Lardner LLP
100 N Tampa St Suite 2700 Tampa, FL 33602 Telephone: 813.225.4119 Email: [email protected] and Marcus Helt (TX 24052187) Foley & Lardner LLP
2021 McKinney Avenue, Suite 1600 Dallas, TX 75201
Telephone: 214.999.4526 Email: [email protected]
Admitted pro hac vice Proposed Counsel for Debtors and Debtors in Possession
Davis Wright Tremaine LLP Attorneys for Synchrony Bank
