By  on April 1, 1994

NEW YORK -- R.H. Macy & Co. shareholders will not have a seat at the table when the chain negotiates payouts.

Bankruptcy Court Judge Burton R. Lifland on Thursday ruled against the Ad Hoc Equity Committee's efforts to gain formal status.

In making his decision, he cited the distant chance for any payout to shareholders, the disruption of ongoing negotiations and the costs that would be incurred by the appointment of such a committee.

As reported, a group of 325 stockholders filed a motion in Bankruptcy Court here more than two years into the Macy's Chapter 11 reorganization, seeking official status and thus a larger role in determining the final Macy's Chapter 11 plan.

Macy's, the U.S. Trustee and nearly every creditor group filed papers in opposition to the equity group's motion because Macy's, with a valuation of $3.6 billion, would not come close to having enough net worth to pay all other creditors and the shareholders.

Having such a committee, and paying its legal counsel and other professionals, those in opposition argued, would only drain the Macy estate of cash.

Arthur Olick, of Anderson, Kill, Olick & Oshinsky, the law firm representing the shareholders, argued the need for an official equity committee, saying no one will be representing the shareholders when Macy's and its creditors meet to hash out the terms of the payouts.

Olick conceded that "there may be no hope" of any recovery for holders of Macy's stock, but said "[shareholders are] entitled to a seat at the negotiating table, where their fate will be decided."

Judge Lifland, siding with Richard Krasnow of Weil Gotshal & Manges, counsel to Macy's, and other opponents of the motion, told the court that Macy's value falls short "by $1 billion or so" of the value that would be necessary for shareholders to receive any payout.

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