JUDGE OK’S LESLIE FAY’S CH.11 EXIT
Byline: Vicki M. Young
NEW YORK — The Leslie Fay Cos. Inc. got Manhattan Bankruptcy Judge Tina L. Brozman’s stamp of approval of its reorganization plan Monday, paving the way for the company to emerge in May from its four-year bankruptcy.
Judge Brozman had approved the plan on April 11, but made it official Monday when she signed the confirmation order.
“We are very pleased to reach this important and final milestone in the reorganization of Leslie Fay,” said John J. Pomerantz, chairman and chief executive officer, in a statement. “Now that the distractions of Chapter 11 are nearly behind us, we look forward to continuing to rebuild our core dress and sportswear businesses.”
He was unavailable for further comment Monday.
Upon consummation of the plan, Leslie Fay will split into two companies — reorganized Leslie Fay and New Sassco, both of which will be creditor-owned. Leslie Fay’s existing equity will be extinguished.
In the works is a possible sale of Leslie Fay’s Castleberry knitwear business. According to the Brian S. Rosen, of Weil Gotshal & Manges, Leslie Fay’s attorneys, the parties are still negotiating the terms of the deal. Consummation of the sale could take place around the time Leslie Fay exits bankruptcy proceedings.
Not affecting the bankruptcy case, but also on the agenda, is a still-unresolved dispute over ownership of the Albert Nipon name. Nipon sold his name and company to Leslie Fay in 1988, but now he wants his name back.
Monday’s hearing took care of some minor administrative details, as well as a last-minute objection by a shareholder, who protested on the grounds that the company’s current directors and officers would remain on the new board after it emerges sometime in May. That objection was promptly disposed of by Alan B. Miller, also of Weil Gotshal, who told the court that Pomerantz would be the only board member returning.
Reorganized Leslie Fay’s Pomerantz and chief financial officer Warren Wishart will sign one-year employment contracts.
Arthur Levine, founder of Sassco and its president since 1980, when he sold it to Leslie Fay, will sign a five-year employment agreement with New Sassco.
Leslie Fay filed for bankruptcy in April 1993 following disclosure on Feb. 1, 1993, of massive accounting irregularities. Leslie Fay restated its earnings for 1990, 1991 and 1992 after finding that it reported income of $81 million more than actual results.
On Oct. 29, 1996, former chief financial officer Paul Polishan was indicted on several counts of securities, bank and wire fraud.
Donald Kenia, also a former member of the financial department, pleaded guilty to federal charges of false reporting to the Securities and Exchange Commission.
For the year ended Dec. 28, 1996, total sales were $429.7 million, down from $770 million in December 1992. In 1996, the company notched up a $9.7 million profit.