Citing the need to accelerate a resolution of the "complex and unique issues" of the R.H. Macy & Co. Chapter 11 case, Bankruptcy Judge Burton R. Lifland has tapped former Secretary of State Cyrus R. Vance to navigate all the parties to a reorganization plan.
On Tuesday, Judge Lifland appointed Vance -- who helped broker the peace accord in the former Yugoslavia -- as the Macy mediator, subject to a formal hearing scheduled for March 3. The naming of a mediator -- a move that surprised many observers -- followed the judge's order giving Macy's a four-month extension until it has to file a plan. That deadline is now Aug. 1. The judge added that he expects Macy's to be out of bankruptcy by the end of the year.
"The purpose of the mediation is to
develop and present to the Court an agreement on the principal terms and conditions of a plan of reorganization in the cases," Lifland said in his order.
Commenting on his decision to name a mediator, Lifland pointed out that there has been a great deal of behind-the-scenes maneuvering with no tangible results.
He added that he hoped "the parties will be encouraged to put forth their proposals on the mediator's table sooner than they would have." Macy's had originally requested a Sept. 15 deadline for filing its plan but after discussions with some of the secured creditors shortened the time frame to Aug. 1
But Macy's is still under the gun to submit by March 8 a five-to-10-page "term sheet" specifying the proposed payouts to creditors under the plan.
The judge's order also opens the door for Macy suitor Federated Department Stores, or any other interested party, to offer its own proposal to Vance.
Following the hearing, which was held in Judge Lifland's courtroom and lasted about two hours, Myron E. Ullman, Macy's chairman and chief executive officer, called the appointment of a mediator "a bit unusual," adding, "We're certainly open to anything that brings the case to a close.
"We favor a calm, thorough review of the facts of the turnaround," Ullman said. "I think the judge acted responsibly...we wished this to be brought to a successful conclusion sooner rather than later."Asked if the company could make the March 8 deadline for the term sheet, Ullman said: "It's up to the mediator to see if that's a realistic date."
Ronald Tysoe, Federated's vice chairman and chief financial officer, declined comment following the hearing. Later in the afternoon, a Federated spokeswoman said Federated has not studied the order and so could not comment. She added, though, that Federated welcomed any process that would expedite the bankruptcy proceedings.
The appointment of a mediator appears to sit well with Macy's creditors.
"I don't see why it wouldn't help us," said Robert Miller, counsel to Macy's bondholders' committee."Anybody that has helped resolve Yugoslavia must have some experience in settling disputes."
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