SOURCE: RedEnvelope, Inc.

May 29, 2008 19:22 ET

RedEnvelope, Inc. Announces Successful Conclusion of Auction in U.S. Bankruptcy Court Chapter 11 Case

SAN FRANCISCO, CA--(Marketwire - May 29, 2008) - RedEnvelope, Inc. (PINKSHEETS: REDEQ) today announced that, following a U.S. Bankruptcy Court-supervised auction under Chapter 11 Section 363 of the U.S. Bankruptcy Code on Tuesday, May 27, 2008, Provide Commerce, Inc., the parent company of ProFlowers, Secret Spoon, Cherry Moon Farms and Shari's Berries, has agreed to acquire substantially all of the assets of RedEnvelope, Inc. (the "Company"). Other qualifying bidders were given an opportunity to submit higher and better offers for the Company's assets through a court-supervised bidding process. In accordance with the details of the auction, Provide Commerce is set to assume ownership of the purchased assets on June 23, 2008. The Company intends to seamlessly continue its business operations during this transition period.

"We were pleased with the successful conclusion of the bankruptcy auction on Tuesday. We look forward to working with Provide Commerce and ensuring that the transition in the coming weeks is smooth for employees, customers, vendors and partners. In addition, we are thrilled that the auction maximized the return for our existing creditors," said Phil Neri, the Company's Chief Financial Officer.

"We are thrilled to add Red Envelope under the Provide Commerce family of brands -- they have a great brand, solid customer base and an attractive line of merchandise," said Bill Strauss, Provide Commerce CEO. "By combining the assets of both companies, we believe we can strengthen all of our brands while providing our customers with even more exciting products to choose from."

Although there can be no guarantee that we will be successful in repaying all of the outstanding claims of our creditors, we believe that based on the expected outcome of the transaction there is a strong possibility that our unsecured creditors will receive substantially all of the amounts owed to them. We expect to begin distributions in the next few months and hope to complete those distributions by the end of 2008.

For information regarding the Company or the successful bankruptcy auction please contact the Company's Chief Restructuring Officer, A. Stone Douglass, at (415) 512-6122.

About RedEnvelope, Inc.

RedEnvelope, Inc. is a retailer dedicated to inspiring people to celebrate their relationships through giving. RedEnvelope offers an extensive collection of imaginative gifts through its webstore, www.RedEnvelope.com.