In re Blue Matrix Labs, LLC

Blue Matrix Labs, LLC (BML) (debtor) was a toy developer that owned a variety of businesses, including Hydro Toys (HT). Facing financial difficulties, BML and its experts determined that recovery for BML’s creditors would be maximized if BML’s businesses were sold as going concerns, meaning operating businesses, rather than liquidated and sold piecemeal. To that end, BML retained Global Toy Experts (GTE), a boutique investment bank focused on the toy industry, to market HT to likely buyers. However, no viable offers were submitted. In December 2015, BML filed a voluntary Chapter 11 bankruptcy petition and continued to operate its businesses as a debtor-in-possession. With the bankruptcy court’s permission, GTE continued to market HT. After extensive, good-faith, arm’s-length negotiations, a buyer (the buyer) entered into an asset-purchase agreement to purchase HT. As the initial bidder, the buyer functioned as the stalking-horse bidder for the sale. The court then established bidding procedures for the sale of HT, including a bid-submission deadline. GTE and BML continued to market HT in full compliance with the court’s order; however, no additional qualifying bids were received by the bid-submission deadline. Accordingly, the buyer was named as the successful bidder, and BML moved to authorize the sale of HT to the buyer. Any objections were either overruled by the court, withdrawn, or settled at or before the sale hearing.