Bidding and negotiations for the assets of bankrupt retailer Steve & Barry’s continued from Monday into Tuesday without a resolution, but a buyer is expected to be revealed as early as today.
This story first appeared in the August 20, 2008 issue of WWD. Subscribe Today.
Without an official purchase agreement, speculation remains that Bay Harbour Management, which offered the auction’s starting bid of $163 million, will be the eventual owner. BH S&B Holdings, a new subsidiary of the Manhattan-based investment advisory firm, was named “stalking horse” bidder at a court hearing on Aug. 4 to determine auction proceedings. A representative from Bay Harbour said the company does not comment on ongoing auctions.
At the time of its initial bid, Steve & Barry’s said BH S&B Holdings wanted to continue to operate the stores and preserve staff and key facilities such as the retailer’s Port Washington, N.Y., headquarters; Columbus, Ohio, distribution center, and certain overseas offices. At the Aug. 4 hearing, lawyers for Steve & Barry’s said the bid would keep a minimum of 125 of the chain’s 276 stores open.
Speaking on Tuesday in front of the Manhattan bankruptcy court judge overseeing the case, attorney Shai Waisman of Weil, Gotshal & Manges, which represents Steve & Barry’s, said: “If there is an adjournment until tomorrow morning, it will be on a successful bid.”
A hearing is set for today at 11:15 a.m.
A possible sticking point in the auction, which was to have concluded Monday, could be the objections of landlords. Several property owners have filed objections expressing concerns over rents owed on leases.
Court documents filed last week also reveal an investigation by creditors into a $5 million loan issued to the company by co-founders and chief executive officers Barry Prevor and Steve Shore less than a month before filing for bankruptcy. According to the documents, the committee of unsecured creditors objected to the immediate repayment of the loan following a final sale. The committee asked the judge to place the money in escrow until it wraps its investigation on Nov. 18. Attorneys for Prevor and Shore filed a letter Monday asking that the objection be overruled.
Steve & Barry’s filed a voluntary Chapter 11 petition in a federal bankruptcy court in Manhattan on July 9, after defaulting on a $197 million asset-backed loan from GE Commercial Finance Corporate Lending and failing to secure an additional $30 million in financing it needed to keep the operations afloat.
Shore and Prevor blamed the company’s financial woes on fuel costs and a customer base unwilling to adjust to higher prices. The move led industry insiders to speculate the firm’s business model, which offers low-priced apparel and footwear and operated on razor-thin margins, was not viable.