Subsequent Events

6 Months Ended

Aug. 01, 2015

Subsequent Events

Subsequent Events

(6) Subsequent Events

On September 3, 2015, Target orally informed the Company that it would not renew the Restated Target Agreement which expires at the end of its current term on January 31, 2017.  Target confirmed the non-renewal in writing on September 4, 2015.  The Restated Target Agreement, including the existing royalty obligations, will remain in effect and continue to generate revenues to Cherokee in Fiscal 2016 and 2017 through its expiration. Target’s election not to renew the Restated Target Agreement triggered an event of default under the Credit Agreement, but JPMorgan and the Company have entered into a Forbearance Agreement pursuant to which JPMorgan has agreed that it will not exercise any of its rights or remedies under the Credit Agreement solely with respect to such event of default through October 12, 2015.  The Company intends to seek a waiver of the event of default during the forbearance period, but no assurance can be given that such waiver will be issued, or if issued, that it will be on terms favorable to the Company.