Eddie Bauer creditors win a round in court - Puget Sound Business Journal (Seattle):

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In setting a July 16 date to auction offEddir Bauer’s assets, U.S. Bankruptcy Judge Mary Walrathn ofthe U.S. Bankruptcy Cour t 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 woulrd be accepted for all or a portion of the Bellevue-baserd retail chain’s assets. It’s too soon to know if this coul dhinder ’s attempts to sell nearlh all of its assets to private equity firm LLC, of New A representative of Eddie Bauer who was not authorizecd to be quoted by name said the company had alwayds anticipated a flexible bid procesd and does not think that process will hampetr attempts to complete the deal with Walrath’s decision is seen as significant by Opening up the bid processd could encourage more bidders to participate and fetch a better price for the retailer’s they say.
Still, Cathy Hershcopf, a New York bankruptcgy attorney working on behalf of unsecured said that it may be in the best interest of Eddie Bauee for the company to continude as anongoing concern. Hershcopf also in an email response to questions about the that the judge gave EddieBauer “maximum flexibility to consider all factore in comparing the bids.” That includesd advantages of the CCMP bid and any othef bids that would keep Eddie Bauer operatinf as a going concern, she said. The , as a bond indentureed trustee, is Eddie Bauer’s largest unsecured creditor. The bank has a $75 millionn claim. The problem boila down to math forthe company’s majod unsecured creditors.
With $240 millionn in secured loans and a bid from CCMPfor $202 attorneys representing The Bank of New York and otherd unsecured creditors worry there won’t be enough from the asseg sale to trickle down to them. Hershcop noted that the secured and unsecured creditorxs have different interests in thebankruptcy Delaware-based bank FSB is the agent for the term loan who are owed $200 million. In legal papers filef with thebankruptcy court, the lenders also arguex that a proposed sale price of $202 million for all of Eddied Bauer’s assets might fall shorrt of maximizing the overall valure of the assets.
Wilmington Trust’s attorneyd argue that in Eddie Bauer’s case, “the sum of the parts may yielxd greater value than the They argued that a bulk biddint process forEddie Bauer’s was “problematic” and threatened to “chill robustg bidding.” A bulk asset deal with CCMP mightr make the best sense for keeping Eddie Bauee in business, according to Wilmington Trust’s But they argued in courty papers that limiting potential buyers to only those interested in buyiny all of Eddie Bauer’xs assets in one lot would make a bidding war less likelyu and would hamper attempts to get the best price for Eddier Bauer’s assets.
In addition to Wilmington Trust, Eddide Bauer owes more than $40 million in revolving loans administered by Bankof America. Eddi Bauer filed for Chapter 11 bankruptcu protection onJune 17. Private equitty firm CCMP Capital Advisorse has offered to buyEddie Bauer’s assetes for $202 million, which is essentially the openinb bid in a bankruptcy court auction scheduled for July 16. If CCMP is not the winningt bidder, the private equity firm is entitled to a fee ofnearlyy $6 million. That would mean any bid or bids trumpingg the CCMP offer wouldx have to beabout $208 million.
CCMP has said it wants to continude to operate Eddie Bauer and would retainthe company’s executive team and keep most of the retailer’s stores Eddie Bauer’s lenders argu that the retailer’s assets can be easily broken down into including the Eddie Bauer brand and intellectual real property, inventory and stor e leases. The lenders say that buyeres who would not have an interest in biddinhg for all ofEddie Bauer’s assets in one lot may have interestf in some of the pieces, potentially fetching a greater totak price than the $202 million offered by Eddie Bauer operates 370 The company has 7,100 employees, including 560 at the Bellevuew headquarters.