Going-out-of-business sales will begin today at Fortunoff Holdings LLC’s 20 retail locations, after a federal bankruptcy judge gave final approval of the estate’s sale to a seven-party joint venture group Wednesday.
The firms are Tiger Capital Group LLC, SB Capital Group LLC, The Great American Group WF LLC, Hudson Capital Partners LLC, The Gordon Co. Inc. and Bobby Wilkerson Inc. The group will manage the liquidation of Fortunoff’s remaining housewares and jewelry inventory, which is valued at retail at about $212 million.
Judge Robert Drain agreed to the sale of Fortunoff to the venture after hearing arguments from lawyers for the debtors and various creditors the day before. “This is the proper time to sell these assets and to do it in this manner,” Drain said on Tuesday.
Lawyers for Fortunoff told the judge that the retailer’s gift cards, which it had stopped accepting after filing for Chapter 11 bankruptcy protection Feb. 5, would be honored until March 8. The New York State Attorney General’s office said consumers still hold an estimated $8.5 million in Fortunoff gift cards and credit slips.
On Monday, the Tiger Capital-led group won an auction for the assets with a bid of roughly $82 million. It beat out the stalking horse bidder, itself a joint venture between liquidators Hillco Merchant Resources and Gordon Brothers Retail Partners Inc., which bears no relation to The Gordon Co. Fortunoff will pay Hillco and Gordon Brothers a breakup fee of $500,000.
This is the second Chapter 11 petition for Fortunoff in as many years. The company filed in early 2008 and was purchased by NRDC Equity Partners in March of that year. On Tuesday, Salvatore Lobiondo of Zolfo Cooper, a restructuring adviser to Fortunoff, testified that most parties seeking to purchase the retailer in the latest auction did not want it as a going concern because of the amount of cash needed to support its continuing operation.
Earlier in the week, Fortunoff’s Hewlett, a single-location Long Island store started by a Fortunoff family member, but independent of the chain, sought to explain to customers that it was not liquidating.
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