BALDWYN, Miss., April 11, 2016 /PRNewswire/ -- Hancock Fabrics and certain of its employees were the subject of an article published on the Daily Journal website on April 9, 2016. However, the author did not speak to the executives whom he referenced in the article. The Company believes the article to be so inaccurate and misleading that it warrants a response:
A few of the more glaring errors and omissions include the following:
- The headline and text of the article falsely implied that CEO Steve Morgan's executive severance would be fully paid, despite the Company's bankruptcy and the liquidation of the Company's business. That is simply untrue and could have been confirmed with a simple phone call or consultation with anyone having the most basic knowledge about the bankruptcy process.
- In fact, Mr. Morgan's pre-petition severance and compensation agreement will be discharged in the bankruptcy case.
- Mr. Morgan neither sought nor received any special treatment for his own pre-petition compensation package in the bankruptcy process, including the severance referenced in the article.
- The article claims that Mr. Morgan will receive company-paid insurance for 18 months following his exit from the Company. This is untrue. As with any other Company employee, he will be responsible for paying his own medical insurance, and he will have received no severance bonus to pay for it, despite the allegations in the article.
- The same facts also apply to the false statements made in the article about the severance packages of Dennis Lyons, Rebecca Flick and Susan Van Benten. These also will be discharged in the bankruptcy and none of these officers sought or received any special treatment for their own pre-petition severance arrangements. They will also be fully responsible for their own health insurance payments and will have received no severance or "change of control" payments.
- The article implied that Senior Vice-President Dennis Lyons had excessive personal charges paid by the Company. In fact, the great majority of these expenses were charges related to the Company's e-commerce business and its website operations. As the Company disclosed in its initial bankruptcy filings [United States Bankruptcy Court for the District of Delaware, Case No. 16-10296, Docket No. 6, filed February 2, 2016] it maintains no corporate credit card accounts. To ensure service continuity of the Company's on-line operations, which costs average $50,000 per month, it has been a longstanding practice that certain employees, including Mr. Lyons, use a personal credit card to pay the expenses and promptly seek reimbursement from the Company for these routine recurring charges. For example, the recurring charges of $500 mentioned in the article were payments to Google for paid searches to the Company's hancockfabrics.com website. That is why these expenses were fully reimbursed by the Company with the approval of the Bankruptcy Court [Docket No. 49].
- While the executives previously received stock grants as part of their compensation, these grants were subject to the same impact of the Company's falling stock price as all other shares. The article valued the stock issued to management employees as of the original grant dates rather than their current market price of approximately two cents.
- In fact, members of the management team have invested their own money in the Company's stock and are fully dedicated to the interests of the Company and its stakeholders, including the Company's employees.
The foregoing list is a small subset of the errors contained in the article. The Company and employees named in the article are investigating their rights. They have reserved all of their rights against the persons and entities involved in publishing the article.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/hancock-fabrics-response-to-daily-journal-news-article-300249538.html
SOURCE Hancock Fabrics, Inc.