CREDITORS’ PLAN FOR BUM GETS APPROVAL BY COURT
NEW YORK — Creditors will become the overseers of BUM International Inc., now that a plan to sell the firm to Tarrant Apparel Group Inc. has been rejected by a Los Angeles Bankruptcy Court.
Under a new reorganization plan approved by the court Wednesday, SOS Management, a partnership headed by Stephen Wayne and Steven Marra, has been hired to manage the company with responsibility for licensing the firm’s trademarks. BUM has been completely a licensing operation since early last year.
The reorganization plan provides that if new management exercises options to acquire stock in BUM, unsecured creditors will be paid between 75 percent and 105 percent of their claims after five or six years. These claims run between $16 million and $18 million.
Tarrant, a private label denim manufacturer based in Los Angeles, said on Aug. 22 that it had agreed to pay $23.8 million for BUM, which would have paid off secured creditors and given unsecured creditors 50 cents on the dollar.
Tarrant said it will not further pursue an acquisition of BUM, which would have provided a brand to complement its private label assortments.
“We thought we had the best offer, but we did not win,” Gerard Guez, Tarrant’s chairman and chief executive officer, said. Guez said the company will continue to look for a brand.
Linda Cantor of Pachulski, Stang, Siehl & Young PC, Los Angeles, counsel to the creditors committee, said the committee had “serious concerns” about whether payments would be made under the Tarrant deal, including proposed payments through letters of credit.
Wayne, who will be responsible for licensing the line, is best known for rebuilding the Sassoon brand after it filed for bankruptcy in 1988. He has also worked on licensing deals with various designer names.
Marra, who will handle the merchandising and retail development of the BUM trademarks, was ceo of Broadway Southwest and currently is ceo of the Lily of France outlet chain.
Wayne said he expects BUM, which has a children’s wear and several international licenses, to have several new licenses in place in the next two weeks.
David McDonald, a member of the committee and chairman and principal of Stores R’ Us, a Rhode Island-based retail consulting firm, and builder/designer of retail space, will become BUM’s chairman and ceo, succeeding founder Morton Forshpan.
BUM has been reorganizing in bankruptcy proceedings since April 1996. It phased out its wholesale casual apparel business in late 1995 and closed its outlet division early in 1996.