NEW YORK — Hong Kong apparel manufacturer S.K. Chow has put in a bid for JH Collectibles, the better-price sportswear firm that filed Chapter 11 last month and is seeking a buyer.
The offer, through a newly formed company called JH Acquisition Corp., was for certain assets of the company, including the name, some inventory, leases for 20 of its 33 outlet stores and its customer lists, according to Arnold Dratt, a Chicago-based turnaround expert hired by JH in September. The offer does not include a distribution center in Milwaukee and factory in Nevada, Mo.
The purchase price was not disclosed, but some market sources speculated it probably ran less than $10 million. That price tag would provide little payout for creditors in JH’s bankruptcy case, which listed liabilities of $78 million.
Chow could not be reached for comment. In February, Chow closed his troubled Bonaventure Textiles USA operation in the U.S., consolidating the offices into a separate company called Bonewco, formed in 1995. The company was set up to absorb the newly acquired Judy Bond and Mr. Witt blouse businesses.
Normand Neal, JH’s president and chief executive officer since November 1994, has resigned from his positions at JH, according to personnel at Milwaukee’s headquarters. Neal, who joined the company 8 1/2 years ago as executive vice president, could not be reached for comment. Reportedly, he would head Chow’s new company if it were successful in acquiring JH.
JH’s creditors committee felt Neal’s continued employment was inappropriate considering the ongoing sale process and his affiliation with Chow’s team, according to sources. In addition, the need for a ceo has diminished at JH because operations have essentially ground to a halt.
JH has not been able to obtain funding to begin production for the spring line, sources said.
Its bankers — M&I Marshall & Ilsley Bank and American National Bank, both of Chicago — late last week gave the company a second extension to Dec. 3 to find a buyer or face liquidation. JH Collectibles filed a Chapter 11 petition on Oct. 4 seeking to sell the company after bankers pulled its credit line.
Meanwhile, sources said “at least a dozen” firms have signed confidentiality agreements for a possible bid for the firm.
Ellen Figg, a moderate sportswear firm here with $50 million in wholesale volume, is one firm that has acknowledged interest in JH, and an executive there on Tuesday said it was considering a bid.
However, JH at the same time is preparing a liquidation plan in case it can’t find a buyer. The liquidation plan would include the sale of its 33 outlet stores in the U.S.
The question remains how long its key department store customers — in particular, Dillard’s, its biggest account — will hang in to do business with JH Collectibles.
“Whether they pull out is one of the biggest issues,” said one industry observer.
According to sources, JH Collectibles has been shipping its holiday goods, albeit late.
“Our clients have reported delays in holiday shipping,” said Tom Burns, senior vice president of The Doneger Group, a buying office here.”They have continued to shop the line, although cautiously. They just saw the spring line in October.”