Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 1 of 60 ORDERED. Dated: August 14, 2020 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF FLORIDA JACKSONVILLE DIVISION In re: Chapter 11 STEIN MART, INC. Case No. 3:20-bk-2387 STEIN MART BUYING CORP. Case No. 3:20-bk-2388 Case No. 3:20-bk-2389 STEIN MART HOLDING CORP., Joint Administration Requested Debtors. INTERIM ORDER (I) AUTHORIZING THE DEBTORS TO ASSUME THE CONSULTING AGREEMENT, (II) APPROVING PROCEDURES FOR STORE CLOSING SALES, AND (III) APPROVING THE IMPLEMENTATION OF CUSTOMARY STORE BONUS PROGRAM AND PAYMENTS TO NON-INSIDERS THEREUNDER THIS CASE came on for consideration upon the motion (the “Motion”)1 (Doc. No. 19) of Stein Mart, Inc. (“SM”), Stein Mart Buying Corp. (“SMB”) and Stein Mart Holding Corp. (“SMHC” and together with SM and SMB, the “Debtors” or the “Company”), as Debtors and Debtors-in-Possession in the above-captioned chapter 11 cases pursuant to sections 105, 363, 365, and 554 of the title 11 of the United States Code, 11 U.S.C. §§ 101–1532 (the “Bankruptcy Code”) and Rules 2002, 6003, and 6004 of the Federal Rules of Bankruptcy Procedure, for entry 1 Capitalized terms not otherwise herein defined shall have the meanings ascribed to them in the Motion. 4822-7491-8342.3 6238466.5 Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 2 of 60 of an order (this “Interim Order”) (a) authorizing the Debtors to assume the Consulting Agreement; (b) authorizing and approving the continuation or initiation of the Sales and Store Closings at the Stores in accordance with the terms of the Consulting Agreement and the Store Closing Procedures, with such Sales to be free and clear of all liens, claims, and encumbrances; (c) approving the Dispute Resolution Procedures described herein to resolve any disputes with governmental units regarding certain applicable non-bankruptcy laws that regulate liquidation and similar-themed sales; (d) approving the implementation of the Store Bonus Program and authorizing payments thereunder to certain non-insider Store employees; (e) scheduling a final hearing to consider approval of the Motion on a final basis; and (f) granting related relief all as more fully set forth in the Motion; and upon the First Day Declaration; and this Court having jurisdiction over the Motion and the relief requested therein in accordance with 28 U.S.C. §§ 157(a)-(b) and 1334(b) and the Order In re: Standing Order Reference of Cases Arising under Title 11, United States Code, entered February 22, 2012, by the United States District Court for the Middle District of Florida; and consideration of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and notice of the Motion having been given as provided in the Motion, and such notice having been adequate and appropriate under the circumstances; and it appearing that no other or further notice of the Motion need be provided; and the Court having held a hearing on August 14, 2020 to consider the interim relief requested in the Motion (the “Hearing”); and upon the record of the Hearing and all of the proceedings had before the Court; and the Court having found and determined that the relief sought in the Motion and granted herein is necessary to avoid immediate and irreparable harm to the Debtors and their estates as contemplated by Bankruptcy Rule 6003, is in the best interests of the Debtors, their respective 2 4822-7491-8342.3 6238466.5 Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 3 of 60 estates and creditors, and all parties-in-interest, and provides a net benefit to the Debtors and their estates, and that the legal and factual bases set forth in the Motion and at the Hearing establish just cause for the relief granted herein; and upon all of the proceedings had before this Court; and after due deliberation and sufficient cause appearing therefor IT IS HEREBY FOUND AND DETERMINED THAT:2 A. The Debtors have advanced sound business reasons for assuming the Consulting Agreement and adopting the Store Closing Procedures, on an interim basis subject to the Final Hearing (defined below), as set forth in the Motion and at the Hearing, and assuming the Consulting Agreement is a reasonable exercise of the Debtors’ business judgment and in the best interests of the Debtors and their estates. B. The Consulting Agreement, a copy of which is attached to this Interim Order as Exhibit 1, was negotiated, proposed, and entered into by the Consultant and the Debtors without collusion, in good faith, and from arm’s length bargaining positions. C. The Store Closing Procedures, which are attached hereto as Exhibit 2, are reasonable and appropriate, and the conduct of the Sales and Store Closings in accordance with the Store Closing Procedures will provide an efficient means for the Debtors to liquidate and dispose of the Store Closure Assets as quickly and effectively as possible, will maximize the returns on the Store Closure Assets, and are in the best interest of the Debtors’ estates. D. The assumption of the Consulting Agreement is a sound exercise of the Debtors’ business judgment. 2 Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as findings of fact where appropriate. See Fed. R. Bankr. P. 7052. 3 4822-7491-8342.3 6238466.5 Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 4 of 60 E. The relief set forth herein is necessary to avoid immediate and irreparable harm to the Debtors and their estates and the Debtors have demonstrated good, sufficient, and sound business purposes and justifications for the relief approved herein. F. The Store Closings and Sales are in the best interest of the Debtors’ estates. G. The Dispute Resolution Procedures are fair and reasonable and comply with applicable law. H. The Debtors have represented that they are neither selling nor leasing personally identifiable information pursuant to the relief requested in the Motion, although the Consultant will be authorized to distribute emails and promotional materials to the Debtors’ customers consistent with the Debtors’ existing policies on the use of consumer information. I. The entry of this Interim Order is in the best interests of the Debtors and their estates and creditors as well as all other parties-in-interest herein; and now therefore it is hereby ORDERED: 1. The Motion is GRANTED on an interim basis. 2. The final hearing (the “Final Hearing”) on the Motion shall be held on September 11, 2020, at 10:30 a.m. (Eastern Time) and any objections or responses to entry of a Final Order on the Motion shall be in writing, filed with the Court, with a copy to chambers, and served upon (i) the proposed attorneys for the Debtors, Foley & Lardner, LLP; (ii) the Office of the United States Trustee for Region 21, George C. Young Federal Building, 400 West Washington Street, Suite 1100 Orlando, Florida 32801; (iii) counsel for the administrative agent under the Debtors’ pre-petition revolving credit facility, Well Fargo Bank, N.A., c/o (a) Otterbourg P.C. (Attn: Daniel F. Fiorillo, Esq. and Chad B. Simon, Esq.), 230 Park Avenue, New York, NY 10169-0075, and (b) Smith, Hulsey & Busey, One Independent Drive, Suite 4 4822-7491-8342.3 6238466.5 Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 5 of 60 3300, Jacksonville, Florida 32202 (Attn: Stephen D. Busey); (iv) counsel for the administrative agent under the Debtors’ pre-petition term loan, Gordon Brothers Finance Company LLC, c/o (a) Morgan Lewis & Bockius LLP, One Federal Street, Boston, Massachusetts 02110, Attn: Matthew F. Furlong, Julia Frost-Davies and Christopher L. Carter, and (b) Holland & Knight LLP, 50 North Laura Street, Suite 3900, Jacksonville, Florida 32202, Attn: Alan M. Weiss; (v) counsel for the Consultant c/o (a) Troutman Pepper Hamilton Sanders LLP, 1313 N. Market St., Suite 5100, Wilmington, Delaware 19801, Attn: Douglas D. Herrmann and Marcy J. McLaughlin Smith, and (b) Quarles & Brady LLP, 101 East Kennedy Boulevard, Suite 3400, Tampa, Florida 33602, Attn: Philip Martino; and (vi) the landlords at any Store(s) affected by such objection, in each case so as to be received no later than fourteen (14) days prior to the Final Hearing. In the event no objections to entry of the Final Order on the Motion are timely received, this Court may enter such Final Order without need for the Final Hearing. 3. The Debtors and the Consultant are authorized and empowered to take any and all further actions as may be reasonably necessary or appropriate to give effect to this Interim Order. The failure to specifically include any particular provision of the Consulting Agreement in this Interim Order shall not diminish or impair the effectiveness of such provisions, it being the intent of this Court that the Consulting Agreement and all of its provisions, payments, and transactions, be and hereby are authorized and approved as and to the extent provided for in this Interim Order. 4. Subject to paragraph 15 and 24 of this Interim Order, to the extent of any conflict between this Interim Order, the Store Closing Procedures, and the Consulting Agreement, the terms of this Interim Order shall control over all other documents and the Store Closing Procedures shall control over the Consulting Agreement. 5 4822-7491-8342.3 6238466.5 Case 3:20-bk-02387-JAF Doc 102 Filed 08/14/20 Page 6 of 60 5.