in the united states bankruptcy court for the ...6 debtor’s case pursuant to section 1102 of the...

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IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

IN RE:

YOGAWORKS, INC., et al.

Debtors.1

Chapter 11

Case No. 20-12599 - KBO

(Joint Administration Requested)

DEBTORS’ MOTION FOR AN ORDER (I) AUTHORIZING DEBTORS TO

(A) FILE CONSOLIDATED LIST OF CREDITORS; (B) FILE CONSOLIDATED

LIST OF DEBTORS’ TOP THIRTY UNSECURED CREDITORS; (C) OMIT

MEMBERS AND FORMER EMPLOYEES FROM THE CREDITOR MATRIX;

(II) APPROVING MANNER OF NOTICE TO MEMBERS AND FORMER

EMPLOYEES; AND (III) GRANTING RELATED RELIEF

YogaWorks, Inc., a Delaware corporation (“YogaWorks”), and Yoga Works, Inc., a

California corporation (“Yoga Works”) (collectively, the “Debtors”), the debtors and debtors

in possession in the above-captioned chapter 11 cases (the “Cases”), by their undersigned

counsel, hereby move (the “Motion”) this Court for entry of an order, substantially in the form

attached hereto as Exhibit A, pursuant to sections 105 and 521 of Chapter 11 of Title 11 of the

United States Code, 11 U.S.C. §§ 101, et seq. (the “Bankruptcy Code”) and Rule 1007 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), and Rules 1001-1(c), 1007-2,

and 2002-1 of Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy

Court for the District of Delaware (the “Local Rules”) authorizing the Debtors to: (a) file a

consolidated list of creditors in lieu of submitting separate mailing matrices for each Debtor; (b)

file a consolidated list of the Debtors’ thirty (30) largest general unsecured creditors; and (c) omit

Members (as defined herein) and Former Employees (as defined herein) from the Creditor Matrix;

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

number is (1) YogaWorks, Inc., a Delaware corporation (9105); and (2) Yoga Works, Inc., a California corporation

(0457).

Case 20-12599-KBO Doc 4 Filed 10/15/20 of 11

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and approving the manner of notice to Members and Former Employees. In support of the

Motion, the Debtors rely on the Declaration of Brian Cooper in Support of First Day Motions

(the “First Day Declaration”) concurrently filed herewith. In further support of the Motion, the

Debtors respectfully represent as follows:

JURISDICTION AND VENUE

1. This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 157 and

1334 and the Amended Standing Order of Reference from the United States District Court

for the District of Delaware, dated February 29, 2012. This matter is a core proceeding

within the meaning of 28 U.S.C. § 157(b)(2), and the Debtors’ consent pursuant to Local

Rule 9013-l(f) to the entry of a final order by the Court in connection with this Motion to the

extent that it is later determined that the Court, absent consent of the parties, cannot enter

final orders or judgments in connection herewith consistent with Article III of the United

States Constitution.

2. Venue is proper pursuant to 28 U.S.C. §§ 1408 and 1409.

3. The statutory predicates for the relief requested herein are sections 105(a) and

52l(a)(l), of the Bankruptcy Code, as supplemented by Bankruptcy Rules 1007(a)(l), (a)(3)

and (d) and Local Rules 1001-l(c) and 1007-2.

BACKGROUND

4. On October 14, 2020, the Debtors filed their respective voluntary petitions for

relief under the Bankruptcy Code (the “Petition Date”).

5. The Debtors continue to manage and operate their businesses as debtors in

possession pursuant to sections 1107 and 1108 of the Bankruptcy Code. No trustee or examiner

has been requested in these chapter 11 cases (“Cases”), and no committees have yet been


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appointed.

6. The Debtors operated a yoga business with over sixty (60) studio locations across

the United States in Los Angeles, Orange County, Northern California, New York City, Boston,

Baltimore, the Washington, D.C. area, Houston and Atlanta until March 2020 when the Debtors

closed all of their storefront locations in response to the operating restrictions tied to the COVID-

19 pandemic. While a few of the stores reopened for a short period of time, the Debtors closed

all of their studios indefinitely in September 2020. The Debtors’ corporate headquarters was

located in Culver City, California until mid-2020 when it was moved to Santa Monica,

California.

7. The Debtors’ business model also includes a digital platform that includes live

stream and on-demand classes through YogaWorks Live and My YogaWorks. YogaWorks Live

provides approximately 40 live classes per day and was launched in April 2020 in response to

COVID-19. MyYogaWorks was launched in 2013 and includes approximately 1,300 hours of

pre-recorded classes and workshops. Members may subscribe to either service for a monthly

membership fee which provides them unlimited access to live or pre-recorded classes. The

Debtors currently have approximately 9,000 members paying for YogaWorks Live and 21,000

members paying for MyYogaWorks (collectively, the “Members”).

8. A more detailed description of the Debtors’ background, structure, operations and

recent financial history is contained in the First Day Declaration, which is incorporated herein.

RELIEF REQUESTED

9. By this Motion, the Debtors seek entry of an order, substantially in the form

attached hereto as Exhibit A: (1) authorizing the Debtors to: (a) file a consolidated list of

creditors in lieu of submitting separate mailing matrices for each Debtor; (b) file a consolidated


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list of the Debtors’ thirty (30) largest unsecured creditors; and (c) omit Members and Former

Employees from the Creditor Matrix; (2) approving the manner of notice to Members and

Former Employees; and (3) granting related relief.

BASIS FOR RELIEF

A. Request for Authority to File Consolidated List of Creditors in Lieu of Submitting

Separate Mailing Matrices for Each Debtor

10. Local Rule 1007-2 provides that, in a voluntary chapter 11 case, the debtor must

file “a list containing the name and complete address of each creditor in such format as directed

by the Clerk’s Office Procedures.” Local Rule 2002-l(f)(v) requires each debtor in jointly

administered cases to maintain a separate creditor mailing matrix. Local Rule 1001-l(c) permits

modification of the Local Rules by the Court “in the interest of justice.”

11. The Debtors presently maintain computerized lists of the names and addresses of

their respective creditors that are entitled to receive notices and other documents in these Cases.

The lists are maintained without regard to which entity the party has a relationship. The Debtors

believe that the information as maintained in computer files (or those of their agents) may be

utilized efficiently to provide interested parties with notices and other similar documents as

contemplated by Local Rule 1007-2 on a consolidated basis. Requiring the Debtors to submit

Debtor-specific creditor matrices for each of the Debtors would be an unnecessarily burdensome

task and would likely result in duplicate mailings. Accordingly, by this Motion, the Debtors seek

authority to file the lists on a consolidated basis, identifying their creditors in the format or

formats currently maintained in the ordinary course of the Debtors’ businesses.

12. Moreover, the Debtors have concurrently, or will be filing within the coming

days, an application (the “Agent Application”) seeking the appointment of BMC Group

(“Agent”) as noticing, balloting and disbursing agent in these Cases. If the Agent Application is


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granted, Agent will, among other things, (a) assist with the consolidation of the Debtors’

computer records into a creditor and security holder database; and (b) complete the mailing of

notices and other documents in these Cases to the parties in these databases. After consultation

with Agent, the Debtors believe that filing the lists in the formats currently maintained in the

ordinary course of business will be sufficient to permit the Agent to notice promptly all

applicable parties as required by Local Rule 1007-2.

13. The Court has granted relief similar to the relief requested herein since the

modifications to Local Rule 2002-l(f)(v) took effect. See, e.g., In re True Religion Apparel, Inc.,

Case No. 17-11460 (BLS) (Bankr. D. Del. July 6, 2017) (authorizing filing of a consolidated list

of creditors in lieu of separate mailing matrices); In re The Walking Company Holdings, Inc., No.

18-10474 (LSS) (Bankr. D. Del. March 8, 2018) (same); In re Central Grocers, Inc., Case No.

17- 10993 (LSS) (Bankr. D. Del. May 4, 2017) (same); In re American Apparel, Inc., Case No.

15- 12055 (BLS) (Bankr. D. Del. Oct. 13, 2015) (same); In re AW! Delaware, Inc., No. 14-12092

(KJC) (Bankr. D. Del. Sept. 10, 2014) (same); In re Entegra Power Group LLC, No. 14-11859

(PJW) (Bankr. D. Del. Aug. 6, 2014) and In re Sugarfina, Inc., No. 19-11973 (MFW) (Bank. D.

Del. Sept. 6, 2019) (same).

B. Request for Authority to File Consolidated List of Debtors’ Top Thirty

Unsecured Creditors

14. Pursuant to Bankruptcy Rule 1007(d), a chapter 11 debtor must file with its

voluntary petition a list setting forth the names, addresses, and claim amounts of the creditors,

excluding insiders, holding the twenty largest unsecured claims in the debtor’s case (a “Top

20 List”). This Top 20 List is primarily used by the United States Trustee (the “U.S. Trustee”)

to evaluate the types and amounts of unsecured claims against the debtor and thus identify

potential candidates to serve on an official committee of unsecured creditors appointed in the


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debtor’s case pursuant to section 1102 of the Bankruptcy Code.

15. The Debtors request authority to file a single list of their thirty (30) largest general

unsecured creditors on a consolidated basis. The Debtors’ largest creditors will likely be their

landlords for past due pre-petition rent and some tax debt. YogaWorks is the named tenant in

some of the leases and in others, Yoga Works is the named tenant. On the Debtors’ records,

however, they are treated without regard to exactly which entity is the contracting party. As

such, it would be most efficient and appropriate to file a single list of the thirty (30) largest

creditors.

16. Due to the number and nature of creditors in these Cases, the Debtors submit that

a single consolidated list of their combined thirty (30) largest unsecured creditors in these Cases

would be more reflective of the body of unsecured creditors that have the greatest stake in these

Cases than separate lists for each of the Debtors. In addition, the Debtors believe a single,

consolidated list of the Debtors’ thirty (30) largest unsecured, noninsider creditors will aid the

U.S. Trustee in its efforts to communicate with these creditors.

17. Accordingly, the Debtors respectfully request authorization to file a single

consolidated list of their thirty (30) largest unsecured creditors in these Cases (the

“Consolidated Top 30 List”).

18. The Debtors believe that such relief is not only appropriate under the

circumstances, but necessary for the efficient and orderly administration of these Cases.

C. Excluding Members and Former Employees From the Creditor Matrix

19. Pursuant to section 521(a)(1) of the Bankruptcy Code and Bankruptcy Rule

1007(a)(1), a chapter 11 petition must be accompanied by a list of creditors containing the name

and address of each entity included or to be included on a debtor’s schedules of liabilities.


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20. Before COVID-19, the Debtors operated in-person yoga studios and currently

offer various classes digitally and online. The Debtors estimate they have over 30,000 Members

(as defined above). The vast majority of the Members will likely not have claims to assert in

these Cases. Given the voluminous nature of the detail regarding Members, providing a list

including each Member and his or her address would be burdensome and time-consuming and

would result in a significant waste of the estates’ resources.

21. Likewise, the Debtors have over 4,500 individuals that were employees of the

Debtors at some point during the past three (3) years but are no longer employed by the Debtors

(“Former Employees”). The vast majority of the Former Employees will likely not have claims

to assert in these Cases but the Debtors believe it is appropriate to give them notice of these

Cases in the event they assert a claim. Providing a list including each Former Employee and his

or her address would be burdensome and time-consuming and would result in a significant waste

of the estates’ resources.

22. As discussed below, to ensure that the Debtors provide sufficient notice of these

Cases to its Members and Former Employees, the Debtors are seeking to implement separate

notice procedures with respect to the Members and the Former Employees. Because the

Members and Former Employees will receive sufficient notice of these Cases by virtue of these

separate service procedures, the Debtors submit that filing a list of all Members and Former

Employees will serve no independent purpose.

23. The relief requested herein is supported by section 105(a) of the Bankruptcy

Code, which provides, in pertinent part, that “[t]he Court may issue any order, process, or

judgment that is necessary or appropriate to carry out the provisions of this title.” The Debtors

submit that the omission of the Members and the Former Employees from the Creditor Matrix is


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appropriate in these Cases and well within the Court’s equitable powers under section 105(a) of

the Bankruptcy Code, insofar as the Debtors will provide sufficient notice to Members and

Former Employees while conserving estate resources.

D. Proposed Procedures for Serving Members and Former Employees with Notices in

the Cases

24. Bankruptcy Rule 2002 establishes the general rule for notifying creditors in

Cases. Specifically, Bankruptcy Rule 2002(a) states that “the clerk, or some other person as the

court may direct, shall give the debtor, the trustee, all creditors and indenture trustees at least 21

days’ notice by mail of (1) the meeting of creditors under § 341 or § 1104(b) of the [Bankruptcy]

Code.” Fed. R. Bankr. P. 2002(a). Bankruptcy Rule 2002(f) provides that such notice of the

order for relief shall be sent by mail to all creditors. See, Fed. R. Bankr. P. 2002(f).

25. As mentioned above, the Debtors have approximately 30,000 Members and 4,500

Former Employees. If the Debtors were to provide actual notice by mail of pleadings and

hearings to all such Members and Former Employees, the costs could be astronomical. BMC

estimates that the cost of postage alone to mail a modest sized notice (less than 10 pages) to a

total of 30,000 Members and 4,500 Former Employees would be over $15,500.00. In addition to

postage, the Debtors would also have to pay for copying charges, printing charges, overhead

costs, and hourly fees for professionals. Accordingly, given the excessive costs of mailing

notices to all current and former Members and all Former Employees, by this Motion, the

Debtors seek authority to serve the notice of commencement of these Cases and notice of the

section 341 meeting of creditors (the “Notice of Commencement”), as well as all further and

future pleadings, hearings and notices in the Debtors’ cases when the Members and/or Former

Employees are entitled to such notice, solely by the following methods: (a) to the extent the


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Debtors have an email address on file for a Member or Former Employee, by email notice; (b) to

the extent the Debtors do not have an email address on file for a Member or Former Employee,

by hard copy mailing; and (c) by publication once in both the national editions of The New York

Times and USA Today. The Debtors will also publish the Notice of Commencement and the

notice of all bar dates on the website to be established by BMC and on the Debtors’ website.

26. In the ordinary course of business, the Debtors’ primary, if not only, method of

communication with its Members is strictly through email. The Debtors do not have mailing

addresses for most of their Members and do not communicate with the Members via US mail.

That being said, and although all Members are typically required to provide a valid email address

at the time they enter into a membership agreement, the Debtors recognize that they do not have

valid email addresses on file for certain Members. The Debtors submit that the combination of

email, mail, and publication of the Notice of Commencement is the most practical method to

notify the Members and the Former Employees of the commencement of these Cases and of all

further and future important dates and pleadings in these Cases. The proposed procedures

represent the most efficient use of the estates’ resources. Further, any party in interest, including

Members and Former Employees, may file a proper notice request to be added to the Creditor

Matrix.

NOTICE

27. The Debtors will provide notice of this Motion to: (a) the Office of the United States

Trustee for the District of Delaware; (b) the holders of the 30 largest unsecured claims against the

Debtors; (c) counsel to the Debtors’ DIP lender Serene Investment Management, LLC, Randy

Michelson, Esq., Michelson Law Group, 220 Montgomery Street, Suite 2100, San Francisco, CA

94104; and (d) counsel to Great Hill Partners, Kelly Dybala, Esq., Sidley Austin, 2021


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McKinney Ave., Suite 2000, Dallas, TX 75201 and Matthew A. Clemente, Esq., Sidley Austin,

One South Dearborn Street, Chicago, IL 60603. As the Motion is seeking “first day” relief,

within two (2) business days after the hearing on the Motion, the Debtors will serve copies of the

Motion and any order entered respecting the Motion as required by Del. Bankr. LR 9013-l(m).

The Debtors submit that, in light of the nature of the relief requested, no other or further notice

need be given.

NO PRIOR REQUEST

28. The Debtors have not previously sought the relief requested herein from this or

any other Court.

WHEREFORE, the Debtors respectfully request entry of an order, substantially in the

form attached hereto as Exhibit A, granting the relief requested in this Motion and such other and

further relief as may be appropriate and proper.


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Dated: October ____, 2020.

Wilmington, Delaware

COZEN O’CONNOR

/s/

Thomas J. Francella, Jr. (DE Bar No. 3835)

Thomas M. Horan (DE Bar No. 4641)

1201 North Market Street, Suite 1001

Wilmington, DE 19801

Telephone: (302) 295-2000

Facsimile: (302) 250-4495

E-mail: [email protected]


and

SHULMAN BASTIAN FRIEDMAN & BUI LLP

Alan J. Friedman (CA Bar No. 132580)

Melissa Davis Lowe(CA Bar No. 245521)

100 Spectrum Center Drive; Suite 600

Irvine, CA 92618

Telephone: (949) 427-1654

Facsimile: (949) 340-3000


[email protected]

Proposed Counsel to the Debtors and Debtors in

Possession

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Thomas J. Francella, Jr.


EXHIBIT A

Proposed Order

Case 20-12599-KBO Doc 4-1 Filed 10/15/20 Page 1 of 5

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IN THE UNITED STATES BANKRUPTCY

COURT FOR THE DISTRICT OF DELAWARE

IN RE:

YOGAWORKS, INC., et al.

Debtors.1

Chapter 11

Case No. 20-12599 - KBO

(Joint Administration Requested)

RE: Docket No. ____

ORDER AUTHORIZING DEBTORS’ MOTION FOR AN ORDER (I) AUTHORIZING

DEBTORS TO (A) FILE CONSOLIDATED LIST OF CREDITORS; (B) FILE

CONSOLIDATED LIST OF DEBTORS’ TOP THIRTY UNSECURED CREDITORS;

AND (C) OMIT MEMBERS AND FORMER EMPLOYEES FROM THE CREDITOR

MATRIX; (II) APPROVING MANNER OF NOTICE TO MEMBERS AND FORMER

EMPLOYEES; AND (III) GRANTING RELATED RELIEF

Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in possession

(the “Debtors”), for entry of an order pursuant to sections 105 and 521 of title 11 of the United

States Code, 11 U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”), Rule 1007 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rules 1001- 1(c) and 1007-2

of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for

the District of Delaware (the “Local Rules”): (i) authorizing the Debtors to (a) file a consolidated list

of creditors in lieu of submitting separate mailing matrices for each Debtor; (b) file a consolidated

list of the Debtors’ top thirty (30) largest unsecured creditors; and (c) omit members and former

employees from the Creditor Matrix; (ii) approving manner of notice to members and former

employees; and (iii) granting related relief; and upon consideration of the First Day Declaration;

and adequate notice of the Motion having been given as set forth in the Motion; and it appearing that

no other or further notice is necessary; and the Court having jurisdiction to consider the Motion and

the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334 and the Amended Standing

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

number is (1) YogaWorks, Inc., a Delaware corporation (9105); and (2) Yoga Works, Inc., a California corporation

(0457).

2 All capitalized terms not otherwise defined herein shall have the meaning ascribed in the Motion.


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Order of Reference from the United States District Court for the District of Delaware, dated

February 29, 2012; and the Court having determined that consideration of the Motion is a core

proceeding pursuant to 28 § 157(b)(2); and the Court having determined that the legal and factual

bases set forth in the Motion and the First Day Declaration establish just cause for the relief

requested in the Motion, and that such relief is in the best interests of the Debtors, their estates,

their creditors, and the parties in interest; and upon the record in these proceedings; and after due

deliberation;

IT IS HEREBY ORDERED THAT:

1. The Motion is GRANTED as set forth herein.

2. The requirement of Local Rule 2002-l(f)(v) that separate mailing matrices be

submitted for each Debtor is permanently waived.

3. The Debtors are authorized to submit a consolidated list of their top thirty (30)

unsecured creditors; provided, however, in the event of conversion of the Debtors’ chapter 11 cases

to cases under chapter 7, the Debtors will provide the Clerk of the Court with an unconsolidated

list of creditors within ten (10) days of such conversion.

4. The Debtors are authorized, but not directed, to exclude Members and Former

Employees from the Creditor Matrix provided that: (i) the Debtors shall file an unredacted version

of the Creditor Matrix, with the residential addresses, under seal with the Clerk’s office; (ii) the

Debtors shall provide an unredacted version of the Creditor Matrix, with the residential addresses,

to the Debtors’ claims agent, the U.S. Trustee, and counsel to the committee, once appointed, as

well as to any subsequently appointed trustee; and (iii) any service by the Debtors or the

committee on the Debtors’ employees and other individual creditors (including but not limited to

service of the bar date notice), shall be made to their residential addresses.

5. As soon as practicable, the Debtors shall serve the notice of commencement of

these chapter 11 cases and notice of the section 341 meeting of creditors (the “Notice of


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Commencement”) to all Members and Former Employees entitled to such Notice of

Commencement solely by the following methods: (a) to the extent the Debtors have an email

address on file for a Member or Former Employee, by email notice only; (b) to the extent the

Debtors do not have an email address on file for a Member or Former Employee, by hard copy

mailing; and (c) by publication once in both the national editions of The New York Times and

USA Today. The Debtors shall also, as soon as practicable, publish the Notice of

Commencement on the website to be established by BMC and on the Debtors’ website.

6. The Debtors shall serve notice of all further and future pleadings, hearings, and

notices in these Cases to which the Members and/or Former Employees are entitled to notice

solely by the following methods: (a) to the extent the Debtors have an email address on file for a

Member or Former Employee, by email notice only; and (b) to the extent the Debtors do not have

an email address on file for a Member or Former Employee, by hard copy mailing.

7. Notwithstanding any other provision in this Order, to the extent the Notice of

Commencement is required to be provided to Members and Former Employees in accordance

with the Bankruptcy Rules or Local Rules, the Debtors are authorized to provide only (i) email

notice, to the extent the Debtors have an email address on file for a Member or Former Employee,

(ii) notice by mail, to the extent the Debtors do not have an email address on file for a Member or

Former Employee, and (iii) publication notice thereof to Members and Former Employees to the

extent that the Debtors have neither email addresses nor physical addresses on file for such

Members and Former Employees. No further notice to current and former Members and Former

Employees of the Notice of Commencement shall be necessary.

8. Notwithstanding any provision in the Federal Rules to the contrary, (i) the terms of

this Order shall be immediately effective and enforceable upon its entry, (ii) the Debtors are not

subject to any stay in the implementation, enforcement or realization of the relief granted in this

Order, and (iii) the Debtors may, in their discretion and without further delay, take any action and


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perform any act authorized under this Order.

9. The Court retains jurisdiction with respect to all matters arising from or related to

the interpretation, implementation or enforcement of this Order.


in the united states bankruptcy court for the ...6 debtor’s case pursuant to section 1102 of the...

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