Perfumania Holdings Inc.’s reorganization plan, expected to become effective on Wednesday, has been accepted by the U.S. Bankruptcy Court for the District of Delaware, the company announced.
The Bellport seller of celebrity and designer fragrances said in a news release that it “expects to pay vendors and suppliers in full in the ordinary course of business” under the “prepackaged” bankruptcy plan.
Calls seeking comment from the company were not returned.
The Chapter 11 plan calls for all outstanding shares of Perfumania common stock to be canceled, though “shareholders will be given the opportunity” to receive $2 per share in exchange for completing a shareholder release form.
The retailer’s stock was delisted from the Nasdaq Stock Market in September after the company failed to make mandatory government filings.
But in over-the-counter trading, shares Monday closed down 11 cents to $1.88.
Once the outstanding stock is canceled, trading will halt on public exchanges and Perfumania will become a private company.
Stephen Nussdorf, Perfumania’s executive chairman, and his family controlled more than 50 percent of Perfumania’s stock as of Aug. 29, according to government filings compiled by Bloomberg.
The Nussdorfs and the second largest shareholder — Rene Garcia with 14.3 percent — formed a new entity, NewHoldCo, under the reorganization plan. Members of that entity agreed to inject $14.3 million into Perfumania through NewHoldCo, but would not be eligible to receive the $2 per share offered to other stockholders.
When Perfumania emerges from bankruptcy, NewHoldCo will own 100 percent of the private company.
The company previously announced plans to close 64 of its 226 stores. Perfumania’s seven Long Island stores and the 295 employees at the stores and corporate headquarters would not be affected, a company spokeswoman said.