Steve & Barry’s Files Stalking Horse Agreement

New subsidiary of Bay Harbour Management looks to acquire selected assets for $163 million.

Steve & Barry’s filed a “stalking horse” asset purchase agreement in federal bankruptcy court in Manhattan on Monday with BH S&B Holding LLC, a new subsidiary of investment firm Bay Harbour Management.

This story first appeared in the August 5, 2008 issue of WWD.  Subscribe Today.

BH S&B Holdings would acquire certain of the bankrupt company’s assets for $163 million. According to Steve & Barry’s, BH S&B Holdings’ expressed the intent to continue operating the retailer with current staff and key facilities, including the company’s Port Washington, N.Y., headquarters; Columbus, Ohio, distribution center, and certain overseas offices.

The assets to be acquired include, but are not limited to, a minimum of 125 Steve & Barry’s store leases; all merchandise, with the exclusion of any product located at stores not purchased by BH S&B Holdings, and all Steve & Barry’s intellectual property rights, including its celebrity and brand licenses, including Sarah Jessica Parker’s Bitten line. Bay Harbour would purchase $25 million in Steve & Barry’s inventory awaiting delivery for which the company would not otherwise be able to pay.

Along with Whippoorwill Associates, Bay Harbour acquired Barneys New York from bankruptcy and sold it to Jones Apparel Group in 2004. Dubai-based Istithmar purchased Barneys from Jones in June 2007.

“We believe that there are many beneficial terms specific to this offer beyond the $163 million offer,” Lori Fife, counsel for Steve & Barry’s, said during court proceedings.

The stalking horse bid will serve as a starting point when the company’s assets hit the auction block at 10 a.m. on Aug. 18 at the Manhattan offices of Weil, Gotshal & Manges LLP, which has represented Steve & Barry’s throughout its bankruptcy proceedings. The company hopes to complete the sale process in court on Aug. 19.

The retailer of cheap-chic apparel, which has 276 stores in 39 states, filed for Chapter 11 on July 9.