Banners of Abingdon, LLC and 40 related entities filed a disclosure statement outlining a Chapter 11 reorganization plan that proposes to pay all creditors in full, with the company continuing operations of 39 Hallmark-branded retail stores throughout Virginia. The disclosure statement, filed January 23, 2026, in the United States Bankruptcy Court for the District of Columbia, details payment schedules ranging from four months for landlord claims under assumed leases to December 2035 for general unsecured creditors.
The debtor entered bankruptcy between September 14-16, 2025, with approximately $9.57 million in assets against $20.2 million in liabilities, including an administrative claim held by Hallmark Marketing Company LLC resulting from debtor-in-possession financing.
Company Background and Business Operations
The debtor operates as a substantively consolidated group of 41 entities, with 39 entities corresponding to individual brick-and-mortar retail locations in Virginia, one management company overseeing operations, and one entity that formerly operated a Maryland location before selling its assets pre-petition.
All retail locations operate under licenses from Hallmark, not franchise agreements, with the debtor operating the majority of Hallmark "Gold Crown" stores in Virginia. The stores also sell products from more than 100 "Allied" vendors beyond Hallmark-branded merchandise. The business employs approximately 518 people.
All 41 debtor entities are owned by A & S, Inc., a corporation that is not itself in bankruptcy. The owners serve as active management and salaried employees of the debtor.
The debtor's asset base consists primarily of retail inventory valued at more than $7.9 million, with additional assets including $811,411 in office furniture and fixtures, $358,485 in automobiles, less than $500,000 in cash and cash equivalents, and litigation rights of undetermined value.
Capital Structure and Claims
The disclosure statement identifies three secured creditors with priority claims:
Hallmark Marketing Company LLC holds an allowed superpriority administrative claim totaling approximately $6,948,973.85 as of January 5, 2026, plus additional costs, fees, and interest at 11% per annum. This claim arose from a debtor-in-possession financing facility with an original principal amount of $10,720,562 authorized by court order on November 24, 2025. The claim is secured by liens senior to all other creditors except for PNC Bank's interest in specific collateral.
Gold Crown Managers Acceptance Corp holds claims totaling $5,350,168, bifurcated into a secured claim of $2,606,723.41 and an unsecured claim of $2,743,444.59. The secured portion is subordinate to Hallmark's lien and PNC Bank's senior secured claim.
PNC Bank, N.A. holds total claims of $2,950,878.93, divided into a senior secured claim of $543,000 (secured by specific collateral) and an unsecured claim of $2,407,878.93.
The debtor also owes trade creditors, including Ganz USA LLC ($176,606.28), Godiva Chocolatier Inc. ($213,072), and Stonewall Kitchen ($196,308), as well as approximately 40 landlords and more than 100 employees with wage claims.
The Proposed Reorganization Plan
The plan proposes to pay all allowed claims in full through a combination of continued retail operations, potential asset sales, and pursuit of litigation claims. The disclosure statement includes cash flow projections demonstrating the debtor's ability to meet these obligations through 2035.
Payment Structure by Creditor Class:
The plan establishes ten classes of claims with varying payment timelines:
Class 1 addresses PNC Bank's claims, with the $543,000 secured portion to be paid over five years at 8% interest through monthly payments of $13,491.08 beginning December 2026, and the unsecured portion paid between December 2026 and December 2035.
Class 2 encompasses Hallmark's superpriority claim, to be repaid through monthly payments and annual principal reductions. The amended credit agreement extends the maturity date to April 1, 2030, with monthly payments of $67,500 initially, increasing to $70,000 and then $75,000 in later periods. The plan requires mandatory annual principal reduction payments: $1,200,000 in December 2026, $1,800,000 in December 2027, $1,200,000 in December 2028, and $1,000,000 in December 2029. Interest accrues at a fixed rate of 11% per annum.
Class 3 covers Crown MAC's bifurcated claims. The secured portion of $2,606,723.41 will be paid over five years at 8% interest, while the unsecured portion follows the general unsecured creditor payment timeline.
Class 4 addresses real estate lessors, split into assumed leases (Class 4.1) and rejected leases (Class 4.2). Cure payments for assumed leases total $159,600 and will be paid over four months beginning after the plan's effective date. The plan rejects four specific leases, with rejection damages calculated under Section 502(b)(6) of the Bankruptcy Code paid alongside other unsecured claims.
Classes 5 and 6 encompass general unsecured trade creditors and employee wage claims, respectively, to be paid between December 2026 and December 2035 according to a payment schedule designed to accommodate the seasonal nature of the retail business.
Class 7 represents the equity interest of A & S, Inc., which retains ownership but cannot take dividends or distributions until all other classes are paid in full.
Hallmark Release and Anti-Refiling Provisions
The plan includes release provisions for Hallmark Marketing Company LLC and its affiliates. The disclosure statement notes that the debtor investigated potential claims against Hallmark related to pre-petition shipment disruptions but determined that pursuit was inadvisable. The stated justifications include prior compensation from Hallmark for disruptions, Hallmark's agreement to extend payment terms under the plan, the debtor's reliance on Hallmark as both licensor and vendor for ongoing operations, and the desire to emerge from bankruptcy without litigation against a key business partner.
The plan also contains anti-refiling provisions agreed upon with Hallmark. If the debtor or its successors file a subsequent bankruptcy case before the Hallmark claim is retired, the automatic stay will be deemed modified to permit Hallmark to enforce its rights in collateral, and the debtor is enjoined from contesting such relief. The confirmation order will constitute a final order of abstention not subject to review, and the debtor is barred from seeking to have the automatic stay apply to Hallmark's collection efforts against guarantors. These provisions terminate only upon full payment of Hallmark's allowed claim.
Litigation Rights and Additional Recovery Sources
The debtor holds two categories of litigation rights that may provide additional recovery:
Bankruptcy Litigation Rights include preference claims under Section 547 of the Bankruptcy Code against a merchant cash advance entity (approximately $125,000 in potential recoveries) and a private lender (approximately $330,000 in potential recoveries), as well as potential fraudulent conveyance claims against the merchant cash advance entity and automatic stay violation claims against the private lender.
Non-Bankruptcy Litigation Rights consist of claims against purchasers of assets formerly held by the debtor, where the disclosure statement indicates the debtor believes it did not receive full compensation pursuant to asset purchase agreements. The plan appoints a representative of the estate to pursue these claims.
All litigation rights remain subject to liens of secured creditors. The plan does not rely on successful prosecution of these claims for feasibility but provides that any net recoveries would be applied first to litigation expenses, then to Hallmark's remaining claim, and finally to other secured and unsecured creditors according to priority.
Feasibility and Cash Flow Projections
The disclosure statement includes monthly cash flow projections for 2026 and annual projections through 2035 demonstrating the plan's feasibility. The projections show the debtor generating between $41 million and $53.6 million in annual cash receipts, with expense categories including payments to Hallmark and Allied vendors, rent of $480,000 monthly, and payroll costs.
The projections show the ending cash balance dropping to approximately $219,000 in September 2026 before recovering. The annual projections show the ending cash balance growing from approximately $1.1 million in 2026 to $14.5 million by 2035. The projections show positive net cash flow in all years except 2027, which projects a negative cash flow of $419,250.
The plan proposes to fund payments primarily through continued operation of the retail stores, with the cash flow analysis accounting for the seasonal nature of the Hallmark retail business. The debtor may also sell one or more retail locations with Hallmark's written consent, with proceeds applied to plan payments.
Alternative Scenarios and Creditor Recovery
The disclosure statement addresses the consequences of plan rejection or conversion to Chapter 7 liquidation. The debtor asserts that liquidation would result in lower distributions to creditors, with Hallmark likely to recover through its liens on substantially all assets, potentially leaving some recovery for Crown MAC but no funds available for unsecured creditors or landlords seeking cure payments. The disclosure statement estimates that liquidation would provide unsecured creditors with no recovery compared to full payment under the proposed plan.
Plan Implementation and Governance
Upon effectiveness, all debtor assets will vest in LBPO Management LLC as the reorganized debtor, which will continue operations using that entity's existing articles of organization. The plan deems all 41 entities to have merged into the reorganized debtor as of the petition date, eliminating the need to maintain separate corporate existences for the other entities.
The reorganized debtor will execute amended and restated agreements with Hallmark, including a credit agreement, account agreement, trademark sublicense agreement, and Crown Rewards program agreement. Personal guarantees by the owners and their holding company, which existed pre-petition, will continue but with a cap at the guaranteed amounts as of the petition date.
Voting and Confirmation Process
All impaired classes under the plan are entitled to vote. The disclosure statement notes that confirmation requires acceptance by at least one impaired class and that the plan proponent reserves the right to seek confirmation through "cramdown" provisions under Section 1129(b) of the Bankruptcy Code if any class votes against the plan.
The effective date is defined as the first business day following the fourteenth calendar day after entry of the confirmation order.
Treatment of Executory Contracts
The plan assumes substantially all executory contracts and unexpired leases, including leases for improved non-residential real estate, utility contracts, employee agreements, and customer contracts. The plan rejects four specific real estate leases:
- Fairfax Company of Virginia LLC
- Bull Run Plaza LLLC
- South Riding Owner LLC
- Fair City HHH LLC
Landlords under rejected leases hold allowed claims for pre-petition arrearages and rejection damages capped under Section 502(b)(6) of the Bankruptcy Code.
Unclaimed Property Provisions
The plan contains provisions for unclaimed property. If any distribution remains unclaimed for 90 days after delivery or attempted delivery, it will be paid first to other members of the same class until that class is paid in full, then to junior classes until all classes are paid in full. Any remaining unclaimed funds will be donated to the University of Miami School of Law Bankruptcy Clinic to support pro bono bankruptcy services and legal education. The plan authorizes the bankruptcy court to appoint an alternative charitable recipient if circumstances change.
Risk Factors
The disclosure statement identifies several risks to plan implementation:
Market-wide economic risks include potential broad economic downturns that could reduce consumer spending in the retail sector, renewed pandemic outbreaks affecting retail operations, and general vulnerabilities in the retail industry.
Geographic concentration risks stem from the debtor's significant presence in the Washington, DC metropolitan area, making the business vulnerable to prolonged government shutdowns, federal government downsizing, or other disruptions affecting disposable income in that region.
Operational risks include the revocability of Hallmark licenses, potential creation of competing licensed locations near existing stores, and possible brand deterioration affecting Hallmark's market position.
The disclosure statement notes these risks are most relevant during the 2026-2030 period when plan payments to Hallmark are due, with the ending cash balance increasing after 2030 according to the projections.
Dates and Deadlines
The disclosure statement identifies the following dates:
- January 26, 2026: Bar date for non-governmental creditors to file proofs of claim
- March 13, 2026: Bar date for governmental entities to file proofs of claim
- Administrative claims bar date: 30 days after the plan's effective date
- First Class 4.1 payment: First business day of first month after effective date
- First Class 1.1 and 3.1 payments: First business day of first month after effective date
- First unsecured creditor payments: December 2026
- Hallmark maturity date: April 1, 2030 (subject to earlier acceleration upon default)
- Final unsecured payments: December 2035
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