Paper Source, Inc. Announces Acceptance of Stalking Horse Bid by MidCap Financial

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The Company will Continue to Deliver Exceptional Products and Services to Customers through Stores, eCommerce and Wholesale Channels - Beloved Lifestyle Brand Will Have Ample Liquidity to Support Operations

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Paper Source, the nation’s premier omnichannel retailer of cards, gifts, party supplies and fine paper, announced today that they will accept a stalking horse bid from a syndicate of lenders led by MidCap Financial to purchase substantially all of the Company’s assets. The MidCap Financial transaction also includes approximately $16.5 million in committed financing, which will be immediately available to support the Company’s operations through its stores, eCommerce and wholesale businesses. This transaction positions Paper Source for future success by providing financing to bridge to a sale that will result in less leverage, a more productive store base and more liquidity to support the brand’s omnichannel growth strategy.

To implement the proposed sale, the company voluntarily commenced chapter 11 cases in the federal courts for the Eastern District of Virginia. MidCap Financial’s purchase offer is made pursuant to 11 U.S.C. §363 and is subject to potential receipt of higher or better offers in an auction process.

“We are very pleased to have the full support of our lenders led by MidCap Financial. Today’s action represents a critical milestone in driving long-term, profitable growth and is a pivotal step forward in achieving the full potential of Paper Source as an omnichannel lifestyle brand. We are delighted to continue to deliver exceptional products and services to our amazing customers through our stores, eCommerce and wholesale channels. The Covid-19 pandemic presented real challenges to our stores business, but this sale will help us to emerge stronger,” said Winnie Park, CEO of Paper Source.

All Paper Source stores will remain open across the country and will continue to operate safely within applicable COVID-related guidelines. The Company has ample liquidity to support ongoing operations across all channels, and to fulfill commitments to its valued employees, customers, makers and suppliers prior to a sale, which is expected to close in approximately 90 days.

Paper Source has filed a series of customary motions seeking to continue operating its business as usual, allowing for ongoing successful engagement with customers both in-store and online. These “first day” motions include requests to continue to pay wages and provide benefits to employees without interruption, honor all gift cards in the normal course, and maintain customer policies. The Company intends to continue to pay suppliers in the ordinary course for all goods received and services performed from today forward. Additional information about these first day motions and Paper Source’s lease portfolio restructuring can be found at

Paper Source is represented by Willkie Farr & Gallagher LLP as counsel, its investment banker is SSG Capital Advisors LLC, A&G Real Estate Partners serves as the real estate consultant, and its financial advisor is M-3 Partners, LP.

About Paper Source

Founded in 1983, Paper Source is a premier paper and gift store offering a curated selection of fine and artisanal papers, invitations, unique gifts, crafts, party supplies, gift wrap, greeting cards and an exclusive collection of envelopes and cards. Paper Source is committed to cultivating a community for their customers as they celebrate all of life’s moments, both big and small. With the company’s goal of “Doing Something Creative Every Day,” Paper Source offers a creative aesthetic with a unique color palette and proprietary designs that are hand-illustrated by an in-house art and design team as well as over 250 artists and makers around the country. Paper Source is an iconic lifestyle brand with 158 stores in the U.S., a direct-to-consumer eCommerce business, and a robust wholesale network. For more information, please visit    

About MidCap Financial

MidCap Financial is a middle market-focused, specialty finance firm that provides senior debt solutions to companies across all industries, providing a broad array of products intended to finance growth and manage working capital. As of December 31, 2020, MidCap Financial provides management or other services for over $29.8 billion of commitments, of which $5.0 billion is managed by MidCap Financial Services Capital Management LLC, a registered investment advisor. MidCap Financial is managed by Apollo Capital Management, L.P., a subsidiary of Apollo Global Management, Inc, pursuant to an investment management agreement. Apollo Global Management, Inc. is one of the world's largest asset managers with approximately $455 billion of assets under management (as of December 31, 2020), providing market leading industry expertise, market reach, and financing synergies. For more information, please visit

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Noreen Heron
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