NEW YORK -- A Delaware bankruptcy court on Wednesday approved Berkshire Hathaway Inc.'s $835 million offer to buy Fruit of the Loom, but not everyone is delighted with the reorganization process.
Although no other bidders came forward at the court-sponsored auction Wednesday, Berkshire, led by investment expert Warren Buffett, still faces an appeal filed in a federal district court by several bondholders who objected to the fee arrangement connected with the bidding procedures.
In a separate legal track in bankruptcy court, a hearing on FTL's revised disclosure statement will be heard on Feb. 3. Assuming Bankruptcy Court Judge Peter Walsh approves the statement, the next step would be the submission of a reorganization plan incorporating the terms of the sale of FTL to creditors for their approval.
Secured creditors are expected to receive approximately 100 percent of the equity in the reorganized FTL, as well as $300 million in unsecured debt, a source said. It was unclear what the dollar amount would be on the return to unsecured creditors, but they are expected to get between 7 and 8 percent of the proceeds from the sale to Berkshire. Although the offer is $835 million, the price is still subject to adjustment. The final price tag could increase if FTL's available working capital exceeds a set target at the close of the deal or decrease if working capital declines.
As reported, FTL filed for Chapter 11 bankruptcy court protection on Dec. 29, 1999.
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