4811-5129-2301.3 

Dennis F. Dunne, Esq. (admitted pro hac vice) Michael A. Condyles, Esq. (VA 27807) 

Evan R. Fleck, Esq. (admitted pro hac vice) Peter J. Barrett, Esq. (VA 46179) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

55 Hudson Yards KUTAK ROCK LLP 

New York, New York 10001 901 East Byrd Street, Suite 1000

Telephone: (212) 530-5000 Richmond, Virginia 23219-4071 

Facsimile: (212) 530-5219 Telephone: (804) 644-1700 

Facsimile: (804) 783-6192 

Co-Counsel for Debtors in Possession 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

RICHMOND DIVISION 

) 

In re: ) Chapter 11 

) 

GYMBOREE GROUP, INC., et al.,

1

) Case No. 19-30258 (KLP) 

) 

Debtors. ) (Jointly Administered) 

) 

DEBTORS’ MOTION TO APPROVE RULE 9019 COMPROMISE WITH FEDERAL 

EXPRESS CORPORATION AND FEDEX GROUND PACKAGE SYSTEM, INC. 

The above-captioned debtors in possession (collectively, the “Debtors”), by counsel, 

respectfully move the Court for entry of an order, substantially in the form of Exhibit A attached 

hereto, approving a settlement and compromise with Federal Express Corporation and Fed Ex 

Ground Package System, Inc. (collectively “FedEx”) regarding adjustments to certain past charges 

billed to Gymboree Group, Inc.’s (“Gymboree”) account with FedEx (the “Motion”), pursuant to 

 

1 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are 

Gymboree Group, Inc. (6587); Gymboree Intermediate Corporation (1473); Gymboree Holding Corporation 

(0315); Gymboree Wholesale, Inc. (6588); Gym-Mark, Inc. (6459); Gymboree Operations, Inc. (6463); 

Gymboree Distribution, Inc. (8669); Gymboree Manufacturing, Inc. (6464); Gymboree Retail Stores, LLC 

(6461); Gym-Card, LLC (5720); and Gymboree Island, LLC (1215). The Debtors’ service address is 

71 Stevenson Street, Suite 2200, San Francisco, California 94105. 

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Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Rule(s)”). In support thereof, the 

Debtors state as follows: 

Background 

1. The Debtors are specialty retailers, operating stores selling high-quality clothing 

and accessories for children. The Debtors’ family of brands consists of Gymboree®, Janie and 

Jack®, and Crazy 8®. As of the Petition Date, the Debtors operated over 900 retail stores, each 

dedicated to one of their brands, in the United States and Canada, with online stores for each brand 

and franchises around the world. 

2. On January 16, 2019 (the “Petition Date”), the Debtors commenced these cases by 

filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. 

§§ 101-1532 (as amended, the “Bankruptcy Code”). The Debtors are authorized to continue to 

operate their business and manage their properties as debtors in possession pursuant to sections 

1107(a) and 1108 of the Bankruptcy Code. 

3. The Debtors’ cases have been consolidated for procedural purposes only and are 

being administered jointly. On January 23, 2019, the United States Trustee for the Eastern District 

of Virginia (the “U.S. Trustee”) appointed an official committee of unsecured creditors (the 

“Committee”) pursuant to section 1102 of the Bankruptcy Code [Docket No. 126]. No request for 

the appointment of a trustee or an examiner has been made. 

4. A comprehensive description of the Debtors’ business and operations, capital 

structure and the events leading to the commencement of these cases can be found in the 

Declaration of Stephen Coulombe, Chief Restructuring Officer of Gymboree Group, Inc., in 

Support of Chapter 11 Petitions and First Day Motions filed on January 17, 2019 [Docket No. 11]. 

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4811-5129-2301.3 

5. FedEx is a provider of transportation and delivery services to the Debtors for which 

the Debtors have maintained one or more accounts for the shipment of packages and related 

services and FedEx continues to provide such services to the Debtors. 

6. FedEx and the Debtors desire to make an adjustment to certain past charges billed 

to certain of the Debtors’ accounts (the “Account”), together with a mutual release of all claims 

arising with respect to charges billed to the Account for shipments between May 1, 2018, through 

and including October 3, 2018, (the “Adjustment Period”). 

JURISDICTION 

7. This proceeding is a core proceeding pursuant to 28 U.S.C. § 157. 

8. The Court has subject matter and personal jurisdiction over all parties in interest 

pursuant to 28 U.S.C. § 1334. 

PROPERTY 

9. As of the Petition Date, certain charges were billed to the Account based on 

shipments made by the Debtors for which FedEx provided services. As a result of those charges, 

certain overpayments were made to FedEx which the parties have agreed to settle by the Debtors 

receiving a credit from FedEx in the amount of $267,944.64 (the “Credit”). 

10. The Debtors’ interest in the Credit constitutes property of the estate pursuant to 11 

U.S.C. § 541. 

11. To ensure sufficient charges exist with respect to the Account in order to receive 

the benefit of the Credit, it is contemplated that the Credit will be applied immediately upon the 

execution of the Settlement Agreement and prior to a hearing on the Motion, with the Credit being 

reversed in the event the Motion is not approved. 

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4811-5129-2301.3 

12. The Debtors have concluded it is in the best interests of the estate and creditors to 

allow FedEx to apply the Credit to the Account in settlement of the matters related to any 

overcharges, rather than incur the additional administrative burden and expense of alternative 

methods of reconciliation. 

13. After thorough review of the underlying facts and negotiations with FedEx, the 

parties have agreed to the settlement reflected in the Account Adjustment and Release Agreement 

attached hereto as Exhibit B (the “Settlement Agreement”) and summarized as follows:2

a. Credit to Gymboree’s Account. FedEx agrees to issue a credit to the 

Account in the amount of Two Hundred Sixty-Seven Thousand, Nine 

Hundred Forty-Four Dollars and Sixty-Four Cents ($267,944.64) for any 

and all overcharges to the Account during the Adjustment Period. 

b. Mutual Release. (a) Subject to entry of an order approving the settlement 

(the “Approval Order”) and receipt of the Credit, (i) Gymboree (on behalf 

of its officers, agents and employees, in their respective capacities as such) 

hereby releases and forever discharges FedEx, its officers, agents, and 

employees, subsidiaries, shareholders, parent companies and successors, in 

their respective capacities as such, from any and all claims now existing, 

which may in the past have arisen, or which may in future arise, with respect 

to any and all overcharges billed to the Account for shipments made during 

the Adjustment Period and (ii) Gymboree further hereby expressly 

acknowledges that it shall not be entitled to any additional refunds or credits 

for overcharges billed to the Account for shipments made during the 

Adjustment Period and further expressly agrees that FedEx shall have no 

obligation to provide and that neither Gymboree nor its agents shall seek 

additional proof of delivery or other documentation concerning service 

performance with respect to said shipments. 

(b) Subject to entry of the Approval Order, (i) FedEx (on behalf of its 

officers, agents and employees, in their respective capacities as such) 

hereby releases and forever discharges Gymboree, its officers, agents, and 

employees, subsidiaries, shareholders, parent companies and successors, in 

their respective capacities as such, from any and all claims now existing, 

which may in the past have arisen, or which may in future arise, with respect 

 

2 This summary provides only a general overview of the Settlement Agreement and does not contain all the relevant 

terms. To determine all relevant terms, a complete review should be conducted of the Settlement Agreement and 

in the event of any inconsistency between this summary and the actual terms of the Settlement Agreement, the 

terms of the Settlement Agreement shall control. 

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4811-5129-2301.3 

to any and all overcharges billed to the Account for shipments made during 

the Adjustment Period and (ii) FedEx further hereby expressly 

acknowledges that it shall not be entitled to any additional payments or 

adjusted balances for overcharges billed to the Account for shipments made 

during the Adjustment Period and further expressly agrees that Gymboree 

shall have no obligation to provide and that neither FedEx nor its agents 

shall seek additional proof of overpayments with respect to said shipments. 

c. Request for Refunds or Credits by any Agent, Third Party or Freight 

Audit House. In the event Gymboree has authorized any agent, third party 

or freight audit house to make or present claims for refunds or credits or to 

receive funds on its behalf with respect to charges made on the Account 

during the Adjustment Period, subject to entry of the Approval Order and 

receipt of the Credit, Gymboree agrees that it shall use commercially 

reasonable efforts to inform said agents, third parties or freight audit houses 

of its intention amicably to resolve its disputes concerning these charges by 

means of the settlement. 

BASIS FOR RELIEF 

14. Bankruptcy Rule 9019 provides, in relevant part: 

On motion by the [debtor in possession] and after notice 

and a hearing, the court may approve a compromise or 

settlement. Notice shall be given to creditors, the United 

States trustee, . . . and indenture trustee as provided in Rule 

2002 and to any other entity as the court may direct.3

15. Compromises are tools for expediting the administration of the case and reducing 

administrative costs, and are favored in bankruptcy.4 The Debtors believe that the Settlement 

Agreement represents a fair and reasonable compromise and settlement of the disputed issues 

regarding FedEx. 

 

3 Fed. R. Bankr. P. 9019(a). 

4 See Official Comm. of Unsecured Creditors v. White Plains Joint Venture (In re Bond), No. 93-1410, 1994 U.S. 

App. LEXIS 1282, at *9–*14 (4th Cir. Jan. 26, 1994) (“To minimize litigation and expedite the administration of 

a bankruptcy estate, compromises are favored in bankruptcy.” (internal quotation marks omitted)); see also In re 

Frye, 216 B.R. 166, 172 (Bankr. E.D. Va. 1997) (citing Richardson v. Richardson, 10 Va. App. 391, 399 (1990)). 

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4811-5129-2301.3 

16. In order to approve a settlement under Bankruptcy Rule 9019, a court must 

determine that the settlement is in the “best interest of the estate” and is “fair and equitable.”5

Among the relevant factors considered by bankruptcy courts in the Eastern District of Virginia are 

“the interests of creditors with proper deference to their reasonable views” and “the complexity, 

time and expense of the litigation.”6 In determining whether to approve a proposed settlement, 

however, the Court should not substitute its judgment for that of the Debtors’.7 Instead, rather 

than conduct “a mini-trial” of the lawsuit at issue, “[t]he Court's fundamental determination is “. . 

. whether the settlement falls below the lowest point in the range of reasonableness.’”8

17. Here, the Debtors respectfully submit that the settlement memorialized in the 

Settlement Agreement is fair, equitable and properly reflects the appropriate legal outcome. As an 

initial matter, the Settlement Agreement is the product of good faith, arm’s-length negotiations 

between the Debtors and Fed Ex. 

18. The Debtors, in an exercise of reasonable business judgment, believe this 

compromise to be in the best interest of the estate and creditors, and represents a means by which 

the parties can proceed in the most efficient manner possible to reconcile the Account with FedEx 

and avoid additional administrative burden. 

19. The Debtors have provided notice of this Motion in accordance with the Order (I) 

Establishing Certain Notice, Case Management, and Administrative Procedures and (II) Granting 

 

5 In re Frye, 216 B.R. at 174. 

6 Shaia v. Three Rivers Wood, Inc. (In re Three Rivers Woods, Inc.), No. 99-3020-T, 2001 Bankr. LEXIS 737, at 

*17 (Bankr. E.D. Va. Mar. 20, 2001) (quoting In re Austin, 186 B.R. 397, 400 (Bankr. E.D. Va. 1995)). 

7 See In re Carla Leather, Inc., 44 B.R. 457, 465 (Bankr. S.D.N.Y. 1984). 

8 Three Rivers Woods, Inc., 2001 Bankr. LEXIS 737, at *17 (quoting In re Austin, 186 B.R. at 400 (internal 

quotation marks omitted)). 

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4811-5129-2301.3 

Related Relief (the “Case Management Order”), [Docket No. 78], and submit that, in light of the 

nature of the relief requested, no other or different notice or service of this Motion or the proposed 

order is necessary. 

WHEREFORE, the Debtors, by counsel, hereby request the Court to approve the 

proposed compromise with FedEx and grand such other relief as the Court deems just and proper. 

Dated: March 21, 2019 /s/ Brian H. Richardson 

Richmond, Virginia Michael A. Condyles, Esq. (VA 27807) 

Peter J. Barrett, Esq. (VA 46179) 

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

KUTAK ROCK LLP 

901 East Byrd Street, Suite 1000

Richmond, Virginia 23219-4071 

Telephone: (804) 644-1700 

Facsimile: (804) 783-6192 

 Email: Michael.Condyles@KutakRock.com 

 Peter.Barrett@KutakRock.com 

 Jeremy.Williams@KutakRock.com 

 Brian.Richardson@KutakRock.com 

-andDennis F. Dunne, Esq. (admitted pro hac vice) 

Evan R. Fleck, Esq. (admitted pro hac vice) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP

55 Hudson Yards

New York, New York 10001 

Telephone: (212) 530-5000 

Facsimile: (212) 530-5219 

 Email: ddunne@milbank.com 

 efleck@milbank.com 

 mprice@milbank.com 

Co-Counsel for Debtors in Possession 

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4811-5129-2301.3 

EXHIBIT A 

Proposed Order 

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4811-5129-2301.3 

Dennis F. Dunne, Esq. (admitted pro hac vice) Michael A. Condyles, Esq. (VA 27807) 

Evan R. Fleck, Esq. (admitted pro hac vice) Peter J. Barrett, Esq. (VA 46179) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

55 Hudson Yards KUTAK ROCK LLP 

New York, New York 10001 901 East Byrd Street, Suite 1000

Telephone: (212) 530-5000 Richmond, Virginia 23219-4071 

Facsimile: (212) 530-5219 Telephone: (804) 644-1700 

Facsimile: (804) 783-6192 

Co-Counsel for Debtors in Possession 

IN THE UNITED STATES BANKRUPTCY COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

RICHMOND DIVISION 

) 

In re: ) Chapter 11 

) 

GYMBOREE GROUP, INC., et al., ) Case No. 19-30258 (KLP) 

) 

Debtors. ) (Jointly Administered) 

) 

ORDER APPROVING DEBTORS’ RULE 9019 COMPROMISE WITH FEDERAL 

EXPRESS CORPORATION AND FEDEX GROUND PACKAGE SYSTEM, INC. 

Upon the motion (the “Motion”)9 of the above-captioned debtors in possession 

(collectively, the “Debtors”), 10 for entry of an order (this “Order”) approving a settlement 

agreement (the, “Settlement Agreement”) between the Debtors and Federal Express Corporation 

and Fed Ex Ground Package System, Inc. (collectively “FedEx”), attached as Exhibit B to the 

Motion, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy 

 

9 Capitalized terms used but not defined herein shall have meanings set forth in the Motion. 

10 The Debtors in these cases, along with the last four digits of each Debtor’s federal tax identification number, are 

Gymboree Group, Inc. (6587); Gymboree Intermediate Corporation (1473); Gymboree Holding Corporation 

(0315); Gymboree Wholesale, Inc. (6588); Gym-Mark, Inc. (6459); Gymboree Operations, Inc. (6463); 

Gymboree Distribution, Inc. (8669); Gymboree Manufacturing, Inc. (6464); Gymboree Retail Stores, LLC 

(6461); Gym-Card, LLC (5720); and Gymboree Island, LLC (1215). The Debtors’ service address is 

71 Stevenson Street, Suite 2200, San Francisco, California 94105. 

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4811-5129-2301.3 

Rules”) and granting related relief, all as more fully set forth in the Motion; and the Court having 

jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 

and 1334; 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 the Court pursuant to 28 U.S.C. §§ 

1408 and 1409; and proper notice of the Motion having been provided to all necessary and 

appropriate parties; and this Court having reviewed the Motion and having considered the 

statements in support of the relief requested therein at a hearing before the Court (the “Hearing”); 

the Court having found that the Debtors’ entry into the Settlement Agreement (i) represents a sound 

exercise of the Debtors’ business judgment, (ii) falls within the range of reasonableness, (iii) is fair 

and equitable and (iv) is in the best interests of the Debtors’ estates and creditors; and the Court 

having determined that the legal and factual bases set forth in the Motion and at the Hearing 

establish just cause for the relief granted herein. Based on the review of the Motion, the record 

and the related pleadings, the Court makes the following findings and conclusions: 

1. The Debtors, upon exercising its business judgment, has determined that the 

Settlement Agreement is in the best interest of the Debtors’ creditors and estates. 

2. In determining whether to approve the Settlement Agreement, the Court must look 

at various factors and determine whether the compromise is in the best interest of the estate and 

whether it is fair and equitable to the creditors of the estate. In re Frye, 216 B.R. 166, 174 (Bankr. 

E.D. Va. 1997). These factors include: (a) the probability of success in litigation; (b) the potential 

difficulties, if any, in collection; (c) the complexity of the litigation involved and the expense, 

inconveniences and delays necessarily attending it; and (d) the paramount interest of the creditors. 

Id. (citations omitted). These factors help the Court determine whether it should approve the 

proposed compromise as fair and equitable to the creditors of the estate. Martin v. Kane (In re A 

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4811-5129-2301.3 

& C Properties), 784 F.2d 1377 (9th Cir. 1986); Drexel, Burnham, Lambert, Inc. v. Flight 

Transportation Corp. (In re Flight Transportation Corp. Securities Litigation), 730 F.2d 1128 (8th 

Cir. 1984); In re Jackson Brewing Co., 624 F.2d 605 (5th Cir. 1980); see also In re Austin, 186 

B.R. 397 (Bankr. E.D. Va. 1995) (discussing factors to approve settlements). 

3. The Debtors’ conducted a cost-benefit analysis regarding these matters, including 

the costs associated with litigation and the implications of success, and has concluded the 

compromise is fair, reasonable and serves the best interests of the estates and the creditors. In 

consideration of the probability of success in litigation, and the attending expense, inconveniences 

and delays, and the paramount interest of the creditors, the Court finds that the compromise is fair 

and reasonable. The Court adopts and approves of the Debtors’ business judgment to enter into 

the compromise. 

4. Notice of the Motion was properly served on all necessary parties. 

UPON DUE CONSIDERATION OF THE ABOVE, IT IS ORDERED, ADJUDGED 

AND DECREED THAT: 

1. The Motion is hereby granted. 

2. Pursuant to Bankruptcy Rule 9019, the Settlement Agreement is APPROVED, and 

the Debtors are authorized to enter into the Settlement Agreement and perform all of their 

obligations thereunder, including granting the releases set forth therein. 

3. The Debtors are authorized to enter into, perform, execute, and deliver all other 

documents, and take all other actions, necessary to immediately effectuate the Settlement 

Agreement between the parties thereto, in accordance with the terms, conditions, and agreements 

related thereto, all of which are hereby approved, and to otherwise effectuate the relief granted in 

this Order in accordance with the Motion. 

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4811-5129-2301.3 

4. Any applicable stay of this Order is hereby waived. 

5. This Court shall retain jurisdiction with respect to the terms of the Compromise and 

this Order. 

________________ 

Richmond, Virginia UNITED STATES BANKRUPTCY COURT JUDGE 

WE ASK FOR THIS: 

/s/ DRAFT 

Michael A. Condyles, Esq. (VA 27807) 

Peter J. Barrett, Esq. (VA 46179) 

Jeremy S. Williams, Esq. (VA 77469) 

Brian H. Richardson, Esq. (VA 92477) 

KUTAK ROCK LLP 

901 East Byrd Street, Suite 1000 

Richmond, Virginia 23219-4071 

Telephone: (804) 644-1700 

Facsimile: (804) 783-6192 

- and - 

Dennis F. Dunne, Esq. (admitted pro hac vice) 

Evan R. Fleck, Esq. (admitted pro hac vice) 

Michael W. Price, Esq. (admitted pro hac vice) 

MILBANK LLP

55 Hudson Yards 

New York, New York 10001 

Telephone: (212) 530-5000 

Facsimile: (212) 530-5219 

Email: ddunne@milbank.com 

efleck@milbank.com 

 mprice@milbank.com 

Co-Counsel for Debtors in Possession 

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4811-5129-2301.3 

CERTIFICATION OF ENDORSEMENT 

UNDER LOCAL BANKRUPTCY RULE 9022-1(C) 

Pursuant to Local Bankruptcy Rule 9022-1(C), I hereby certify that the foregoing 

proposed order has been endorsed by or served upon all necessary parties. 

 /s/ DRAFT 

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4811-5129-2301.3 

EXHIBIT B 

Settlement Agreement 

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