NEW YORK--Bankruptcy court on Friday approved Woodward & Lothrop's guidelines for a second and final auction of its assets.
The department store chain, which continues to reorganize under Chapter 11 as it looks for a buyer, formulated the guidelines in hopes of attracting improved offers for its stores.
W&L called the first round of bids "not satisfactory" and will run the second sealed-bid auction through the end of May.
Under the guidelines approved by Bankruptcy Judge Stuart Bernstein, any company wishing to outbid the highest sealed-bid offer will have that opportunity, but must submit an offer at least $30 million higher than the previous high bidder.
If that happens, the outbid company would receive a break-up fee equal to 1 percent of the new winning bid, up to $7.5 million. W&L would also pay the outbid company up to $1.5 million to cover expenses.
Marc Abrams, of Willkie, Farr & Gallagher, counsel to W&L, told Judge Bernstein that the auction guidelines would "provide bidders with an incentive to put their best feet forward."
At the same time, Judge Bernstein agreed to extend W&L's exclusivity period two months, to July 21, to give W&L time to decide to sell the business or reorganize under a stand-alone plan.

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