Turnaround and Performance Improvement Advisors

Wachovia Capital FinancialRe: Scotty Acquisition Corp. et.a!. Cases

To whom it may concern:

Renaissance Partners L.C. was employed by the Debtors in their Chapter 11 cases as financial and restructuring advisor in September 2004. To the best of our knowledge, based on discussions with the debtor, during the duration of the case Renaissance provided services requested by the debtor, Wachovia Capital Finance (then Congress Financial Corp.) and the unsecured creditor’s committee in a professional manner. The services provided included, but were not limited to, the following:

1. Operational and financial review and analysis of historical performance.
2. Financial and Business Plan preparation under various scenarios of going-forward stores after first determining the historical and projected 4-wall profitability of each location (stores, outlet centers and sub-let properties).
3. Expense review and analysis,
4. Inventory analysis to determine optimum going-forward inventory based on the various store count scenarios analyzed.
5. Projected trade support required on going-forward business
6. Review worker’s compensation claims.
7. Prepared liquidation analysis and comparisons with go-forward operating scenarios.
8. Prepared detailed cash flow models / budgets on a monthly basis and on a weekly basis consistent with the financial models utilized for the debtor and Wachovia Capital Finance.

9. Preparation, with the debtor, of all schedules, UST reports and Monthly Operating Reports required by the Chapter 11 cases.
10. Analyzed bids submitted for three rounds of liquidation scenarios including full liquidation and partial liquidations under store count scenarios analyzed. Such liquidation bids included merchandise, furniture and fixtures (FFE), real estate and intellectual property as well as the affect of augmentation merchandise and consignment rugs. Bids were solicited on a guarantee and fee basis with final bids submitted by liquidators on only a fee basis.
11. Renaissance along with debtor’s counsel negotiated final agreements with liquidators and selected the final and best bid for the merchandise, FFE and real estate. Renaissance communicated often and objectively with us in this process to obtain our feedback and support of the final decisions.
12. Renaissance assisted Hilco Real Estate and the debtors in analysis of real estate bids at auction and otherwise relating to those bids that were ultimately selected as highest and best bids.
13. Renaissance reviewed Hilco Merchant Services and Hudson Capital joint venture in analysis of their initial and revised liquidation phasing plans.
14. Renaissance tracked, at the request of the debtors and Wachovia Capital Finance, liquidation performance by location by component on a daily basis throughout the liquidation sale, advising the debtor and us on re-projected liquidation outcome, shortage, possible inventory transfers and early store closings.
15. Renaissance prepared weekly reports of actual versus plan cash flow by receipts and disbursement line-items for the debtors and Wachovia Capital Finance that was required by us to ensure continued funding of payroll, rents, utilities and other necessary expenses throughout the liquidation sale until Wachovia Capital Finance was paid in full. During this period Renaissance negotiated with us on behalf of the debtor to ensure that sales taxes and other critical non operating expenses were also paid when due.
16. Renaissance updated weekly cash flow projection models each week based on actual receipts trends and disbursements timing for the debtor, its counsel and Wachovia Capital Finance.
17. Renaissance prepared daily liquidation tracking throughout the sale period and at the end provided the debtor and us with final reports as we requested.


In summary, Renaissance Partners’ services were essential to the conduct of the case and creation of the highest possible liquidation values in a timely manner. Due to Scotty’s limited staffing and experience in Chapter 11 the services provided by Renaissance in accounting matters, reporting, insurance and cash flow management were essential. All services provided by Renaissance were, to the best of our knowledge, requested by and required by the debtors and Wachovia Capital Finance and were provided in a highly effective manner and its objective communications with all stakeholders ensured that decisions required in the case were executed on a timely basis. Wachovia Capital Finance was completely satisfied with the work of Renaissance Partners and would recommend their services to clients in a similar position as that experienced by Scotty’s.


Gary Dixon


Wachovia Capital Finance