Eddie Bauer creditors win a round in court - Boston Business Journal:

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In setting a July 16 date to auction offEddide Bauer’s assets, U.S. Bankruptcy Judge Mary Walrath ofthe U.S. Bankruptcyu Court in Delaware, agreed to not requiree any potential buyer to make a bulk bid forthe Instead, Walrath agreed with major creditors and debt holders that bids would be accepted for all or a portion of the Bellevue-base d retail chain’s assets. It’ s too soon to know if this couldhamper ’s attempts to sell nearl all of its assets to private equity firm LLC, of New York. But the rulinbg is seen as significantby creditors.
Opening up the bid process couldx encourage more bidders to participate and fetc h a better price forthe retailer’s assets, said Cathyh Hershcopf, a New York bankruptcy attorney working on behaltf of unsecured creditors. Eddie Bauer’s unsecurefd creditors includeThe , which it owes $75 The problem boils down to math for the company’s lenders and other major creditors. With $240 million in securexd loans and a bid from CCMPfor $202 million, attorneyas representing The Bank of New York and othe unsecured creditors worry there won’t be enoughj from the asset sale to trickle down to Delaware-based bank FSB is the agenr for the term loan lenders, who are owed $200 In legal papers filed with the bankruptcty court, the lenders also argued that a proposed sale pricee of $202 million for all of Eddie Baued Holdings Inc.
’s assets mighyt fall short of maximizing the overall valuwe of Eddie Bauer’s assets. Wilmington Trust’s attorney s argue that in Eddi Bauer’s case, “the sum of the parts may yield greaterf value than the They argued that a bulk biddingf process forEddie Bauer’s was and threatened to “chill robust A bulk asset deal with CCMP mighft make the best sense for keepintg Eddie Bauer in business, according to Wilmington Trust’w attorneys.
But they argued in coury papers that limiting potential buyers to only those interested in buying all ofEddid Bauer’s assets in one lot, woulrd make a bidding war less likely and hamperr attempts to get the best price for Eddid Bauer’s assets. Representatives for Eddie Bauer and CCMP did not immediatelg respond to requestsfor comment. In addition to Wilmington Trust, Eddie Bauet owes more than $40 million in revolving loans administeredr by Bankof . Private equity firm CCMP Capital Advisors has offered to buyEddise Bauer’s assets for $202 million, which is essentiallu the opening bid in a bankruptcyt court auction scheduled for July 16.
If CCMP is not the winningy bidder, the private equity firm is entitled to a fee ofnearl $6 million. That would mean any bid or bids trumpingh the CCMP offer would have to beaboutr $208 million. CCMP has said it wantd to continue to operate Eddie Bauer and wouls retainthe company’s executive team and keep most of the retailer’se stores open. Eddie Bauer’s lenders argue that the retailer’a assets can be easily broken down into including the Eddie Bauer brandr andintellectual property, real property, inventory and storde leases.
The lenders say that buyers, who would not have an interesy in bidding for all ofEddie Bauer’ assets in one lot, may have interest in some of the potentially fetching a greater total price that the $202 milliob offered by CCMP. Eddie Bauer operates 370 stores. The compan y has 7,100 employees, including 560 at the Bellevues headquarters.