Careismatic Brands, LLC, the world's largest medical apparel provider with brands including Cherokee, Dickies Medical, Infinity, Healing Hands, and Med Couture, filed for Chapter 11 protection on January 22, 2024, in the District of New Jersey (Case No. 24-10561) before Judge Vincent F. Papalia, together with 21 affiliate debtors. The filing followed a prenegotiated restructuring support agreement with 76% of first lien lenders and 70% of second lien lenders to eliminate approximately $833 million in prepetition debt through a debt-to-equity recapitalization. Headquartered in Santa Monica, California, the company distributed scrubs and healthcare apparel to 2,300+ wholesale customers across 75+ countries but experienced a roughly 19% revenue decline from its 2021 peak of $687 million to $559 million in 2023, driven by post-pandemic demand normalization and supply chain cost pressures on an overleveraged capital structure from Partners Group's $1.3 billion acquisition in 2021. The debtors obtained a $125 million super-senior delayed-draw DIP facility from prepetition first lien lenders at SOFR + 6.00%, with an 11.0% backstop fee, 3.5% commitment fee, and 3.5% exit fee. A sale process produced no qualified bids, and the auction was cancelled in April 2024. The Second Amended Joint Plan of Reorganization was confirmed on May 31, 2024, and the company emerged on June 13, 2024, under new ownership by Nexus Capital Management, with first lien lenders receiving 100% of new common stock (plan enterprise value $325 million) and second lien lenders receiving conditional warrants for up to 8.5% of new equity at an $818 million strike price. A GUC Trust was established with retained causes of action. The UCC appealed the confirmation order, but the appeal was dismissed after a stipulation regarding U.S. Trustee quarterly fees. Affiliate cases were closed by final decree in July 2024, and post-effective claims administration continues under the GUC Trust framework.
