Loehmann’s Holdings Inc., the bankrupt New York-based retailer of discounted designer goods, won court approval to sell its inventory and intellectual property for an estimated value of $16.4 million. It’s still negotiating the terms of a sale of its real estate assets.
U.S. Bankruptcy Judge Martin Glenn in Manhattan today said the company can accept an offer for its inventory from SB Capital Group LLC and Tiger Capital Group LLC. The liquidators won an auction Jan. 3 with an offer to pay 29.8 percent for inventory valued at around $51 million, along with some other fees based on cash held at Loehmann’s stores.
“This is the proverbial melting ice cube,” Glenn said. “Unless the sale takes place promptly, value will be lost.” He said that there was no alternative but to let the sale to go forward, and that the price was fair and reasonable.
He also approved the sale of Loehmann’s intellectual property and customer lists to Esopus Creek Value Series Fund LP, which offered $850,000.
“The debtor estimates that $16.4 million is the value of these two assets,” Sayan Bhattacharyya, a lawyer for Loehmann’s, told the judge today.
The retailer’s auction opened with a bid of $19 million for all assets, including real estate, from the group of liquidators that ended up offering the highest and best bid. Lawyers told Glenn today the company will try to start store-closing sales as early as Jan. 9.
Kristopher Hansen, another Loehmann’s lawyer, told Glenn the plan to sell assets in separate categories resulted in “significantly more value for the estate.”
Loehmann’s announced yesterday that Madison Capital Holdings LLC had submitted the top bid for the real estate.
“There are still ongoing discussions with Madison,” Bhattacharyya told Glenn.
Loehmann’s, controlled by Whippoorwill Associates Inc., filed for Chapter 11 protection on Dec. 15. It was the retailer’s third trip through bankruptcy.
A committee of unsecured creditors had objected to provisions that would give some sale proceeds to entities related to Whippoorwill. The committee plans to investigate whether the entities’ claims on Loehmann’s assets are valid, according to court papers.
Loehmann’s also may not be able to pay costs of its bankruptcy, the committee said. The amount allotted for the professional costs is “insufficient” to cover even minimum tasks in the case, according to the panel.
Glenn delayed Loehmann’s request to pay bonuses to Chief Operating Officer William Thayer and General Counsel Mindy Novack. The U.S. Trustee, the Justice Department’s bankruptcy watchdog, objected that the plan called for paying the two $655,250 without proving that the benchmarks required of them were challenging.
The judge agreed to hear the matter Jan. 10 after Hansen told him the company wanted more time to work with the U.S. Trustee.
The retailer initially planned to hold an auction by Dec. 30, get court approval by Jan. 2 and begin closing sales before today. Glenn pushed the timeline back, saying it was unreasonably short and sought to benefit secured lenders including Wells Fargo & Co.
Loehmann’s, which carries brands such as Michael Kors and Calvin Klein, has 40 stores in 11 states that sell designer goods at discounts of 30 percent to 65 percent, according to its website.
The case is In re Loehmann’s Holdings Inc., 13-bk-14050, U.S. Bankruptcy Court, Southern District of New York (Manhattan).