Ironclad Performance Wear Corporation(OTCMKTS:ICPWQ)

Ironclad Performance Wear Corporation is a company that filed for bankruptcy on September 8th in the Central District of California, San Fernando Valley Division.  During this bankruptcy Ironclad will continue to its operations while pursuing a 363 sale for substantially all its assets.

In order to carry on with its operations, Ironclad got DIP financing from Radians Wareham Holding Inc. which consists of an initial 1m to draw on followed by an additional 1m for purchases additional inventory.

Concurrently along with the DIP financing, Radians also entered into a Stalking Horse Purchase Agreement in which Radians plans to purchase substantially all of Ironclad's assets for $20m, subject to a reduction to $15m and assumption of certain liabilities. According to CEO Geoff Greulich's First Day Declaration, the "purchaser will be paying a cash purchase price of either $15 million or $20 million depending upon the occurrence of an event which is sensitive and is the subject of a motion the Debtors are filing under seal".  No word yet on what that event may be.

Radians is also the holder of about $4m of secured debt which it purchased from Citibank not too long ago.

In Greulich's Declaration, he has also estimated total debt should be in the range of $8-10m and expects creditors to be fully repaid, with substantial value leftover for shareholders.

All parties are pushing for an auction in October with the goal of having a Sale Approval hearing before October 30th. The bidding procedures will require initial overbid of $750k followed by increments of $250k thereafter.  Radians will receive a breakup fee of 500k should they lose the auction.

Pre- petition, Ironclad hired Craig-Hallum as their investment bankers to shop the debtors business and have found several parties interested.  However, Ironclad ran out of cash before the parties due diligence had been completed, yet there is some expectation of other participants in the auction. The bidding procedures are not strenuous enough to dissuade others from participating.

Ironclad should have enough NOLs to cover the taxes on an asset sale, and the bankruptcy should be quick enough to avoid excessive lawyer fees. This is an opportunity with a defined catalyst and minimal downside.

An equity committee was appointed on September 20th consisting of Patrick W O'Brien, Ronald Chez and Scott Jarus.  The docket is available only through Pacer under case number 1:17-bk-12408 and the Judge is the Honorable Martin R. Barash.

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