Douglas M. Foley (VSB No. 34364)

Sarah B. Boehm (VSB No. 45201)

MCGUIREWOODS LLP

Gateway Plaza

800 East Canal Street

Richmond, Virginia 23219

Telephone: (804) 775-1000

—and—

Gregg M. Galardi (pro hac vice forthcoming)

Daniel G. Egan (pro hac vice forthcoming)

ROPES & GRAY LLP

1211 Avenue of the Americas

New York, New York 10036

Telephone: (212) 596-9000

Co-Counsel to Retail Funding (P1), LLC 

and Oaktree Value Opportunities Fund, L.P.

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

RICHMOND DIVISION

In re

PIER 1 IMPORTS, INC., et al.,

Debtors.1

)

)

)

)

)

)

)

)

Chapter 11

Case No. 20-30805 (KRH)

(Jointly Administered)

Re: Dkt. Nos. 25 & 93

RESERVATION OF RIGHTS OF RETAIL FUNDING (P1), LLC AND

OAKTREE VALUE OPPORTUNITIES FUND, L.P. WITH RESPECT TO THE 

DEBTORS’ MOTION FOR ENTRY OF A FINAL ORDER (I) AUTHORIZING 

THE DEBTORS TO OBTAIN POSTPETITION FINANCING, (II) AUTHORIZING 

THE DEBTORS TO USE CASH COLLATERAL, (III) GRANTING LIENS AND 

PROVIDING SUPERPRIORITY ADMINISTRATIVE EXPENSE STATUS, 

(IV) GRANTING ADEQUATE PROTECTION, (V) MODIFYING THE 

AUTOMATIC STAY, AND (VI) GRANTING RELATED RELIEF

Retail Funding (P1), LLC, on behalf of itself and certain funds managed thereby and 

affiliated therewith (“Retail Funding”), and Oaktree Value Opportunities Fund, L.P., on behalf of 

 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification 

number, are set forth in the Debtors’ Motion for Entry of an Order (I) Directing Joint Administration of Chapter 

11 Cases and (II) Granting Related Relief filed contemporaneously herewith. The location of the Debtors’ service 

address is 100 Pier 1 Place, Fort Worth, TX 76102.

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itself and certain funds managed thereby and affiliated therewith (“Oaktree” and, together with 

Retail Funding, the “Term Lenders”), by and through their undersigned counsel, hereby file this 

reservation of rights with respect to the motion of the above-captioned debtors and debtors in 

possession (collectively, the “Debtors”) for entry of a final order (i) authorizing the Debtors to 

obtain senior secured postpetition financing, (ii) authorizing the Debtors to use cash collateral, 

(iii) granting liens and providing superpriority administrative expense status, (iv) granting 

adequate protection, (v) modifying the automatic stay, and (vi) granting related relief [Dkt. No. 

25] (the “DIP Motion”).2 In support hereof, the Term Lenders respectfully state as follows:

1. The Term Lenders are Prepetition Term Loan Lenders under the Prepetition Term 

Loan Agreement, but are not a party to the Plan Support Agreement, dated as of February 16, 2020,

by and among the Debtors and certain consenting Prepetition Term Loan Lenders. The Term 

Lenders do not oppose the entry of a final order with respect to the DIP Motion, but make this 

filing to reserve their rights with respect to any ultimate allocation of fees and expenses in these 

cases and with respect to certain other issues.

2. As set forth in the Interim Order entered on February 18, 2020 in connection with 

the DIP Motion, the Prepetition Term Loan Agent, for itself and the Prepetition Term Loan 

Lenders, and the Prepetition ABL Agents, for themselves and the Prepetition ABL Lenders, are 

parties to an Intercreditor Agreement setting forth, among other things, the relative priority of their 

liens on and security interests in the Debtors’ assets and the order of application of any proceeds 

with respect to their respective collateral.

3. The DIP Senior Credit Facility preserves this priority structure of liens as between 

the DIP Secured Parties, on the one hand, and the Prepetition Term Loan Parties, on the other 

 2 Capitalized terms used but not defined herein shall have the meanings ascribed to them in the DIP Motion.

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hand. Specifically, the DIP Secured Parties will continue to have a first priority lien on the ABL 

Priority Collateral (now, the DIP Primary Collateral), and the Prepetition Term Loan Parties will 

continue to have a first priority lien on the Term Priority Collateral. See Interim Order ¶¶ 4 and 

60.

4. The Debtors are currently running a process in accordance with certain Courtapproved bidding procedures (the “Bidding Procedures”) pursuant to which the Debtors are 

seeking to sell all or any portion of their assets either as a going-concern or liquidation. Dkt. No. 

102. Accordingly, assets available for sale include the ABL Priority Collateral and the Term 

Priority Collateral. The Bidding Procedures provide that any bid submitted for all or a portion of 

the Debtors’ assets must, among other things, “use commercially reasonable efforts to indicate the 

allocation of the Purchase Price between ABL Priority Collateral and Term Priority Collateral.” 

Dkt. No. 102 at Ex. 1.

5. The deadline for interested parties to submit bids for all or part of the Debtors’ 

assets is March 23, 2020, and there is no assurance that any bid or combination of bids will be 

sufficient to pay in full all DIP Facility Obligations and Prepetition Term Loan Obligations. Also, 

the budget attached to the DIP Motion contemplates significant administrative fees and expenses 

during these cases (including professional fees and debt service costs totaling more than $28

million), but the Interim Order does not address how such fees and expenses will be allocated as 

between the DIP Primary Collateral and the Term Priority Collateral if the sale proceeds are not 

sufficient. 

6. The Prepetition Term Loan Parties should not bear the burden of fees and expenses 

incurred by the estates to preserve, sell or otherwise dispose of the DIP Primary Collateral. 

Accordingly, any final order entered with respect to the DIP Motion should make clear that nothing

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in such order is intended to finally determine the appropriate allocation of fees and expenses as 

between the DIP Primary Collateral and the Term Priority Collateral or impair any rights of parties 

in interest, including the Prepetition Term Loan Parties, with respect to allocation issues. 

RESERVATION OF RIGHTS

7. The Term Lenders expressly reserve all rights (a) in connection with any allocation 

as between the DIP Primary Collateral and the Term Priority Collateral of the fees and expenses 

incurred in administering these cases or in preserving or disposing of the Debtors’ assets, including 

the right ask this Court to make a determination as to the appropriate allocation of such fees and 

expenses, and (b) to contest any fees, costs, and administrative expenses incurred or proposed to 

be incurred in these cases.

Dated: March 6, 2020

Richmond, Virginia Respectfully submitted,

/s/ Douglas M. Foley

Douglas M. Foley (VSB No. 34364)

Sarah B. Boehm (VSB No. 45201)

McGuireWoods LLP

Gateway Plaza

800 East Canal Street

Richmond, Virginia 23219

Telephone: (804) 775-1000

Email: dfoley@mcguirewoods.com

sboehm@mcguirewoods.com

—and—

Gregg M. Galardi (pro hac vice forthcoming)

Daniel G. Egan (pro hac vice forthcoming)

Ropes & Gray LLP

1211 Avenue of the Americas

New York, New York 10036

Telephone: (212) 596-9000

Email: Gregg.Galardi@ropesgray.com

Daniel.Egan@ropesgray.com

Co-Counsel to Retail Funding (P1), LLC and 

Oaktree Value Opportunities Fund, L.P.

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