LESLIE FAY ASKS 7TH DELAY ON PLAN
NEW YORK — The Leslie Fay Cos. has asked Bankruptcy Judge Tina L. Brozman to extend its exclusivity period for 70 days, until May 1, during which only it could file a plan of reorganization.
The extension, which would be the seventh since the women’s apparel maker filed for Chapter 11 reorganization on April 5, 1993, would give Leslie Fay time to advance its planned downsizing and restructuring. This includes the closing of the company’s U.K. and Canada operations, except for those involved with its Sassco Fashions division, Leslie Fay said in court papers.
The same 70-day extension would also give Leslie Fay time to further negotiations with “an interested party” concerning the possible sale of Sassco, according to court papers. As reported, Arthur Levine, Sassco’s chairman and founder, has acknowledged he wants to buy back the business he sold to Leslie Fay in 1979. If not sold, the unit might be spun off to creditors, the company has said.
Brozman has scheduled a Feb. 16 hearing on the extension request.
The firm, which was rocked into reorganization after disclosure of an accounting scandal that overstated earnings by $119 million over three years, has had a turbulent 22 months in Chapter 11, with an internal investigation into the scandal and a concurrent Federal criminal probe distracting it from its core reorganization responsibilities.
According to court papers, those distractions seem to have passed. Alan B. Miller, of Weil Gotschal & Manges, counsel to the debtor, said in a motion to extend exclusivity that Leslie Fay has completed an outline of a plan of reorganization that proposes a payout of new equity in Leslie Fay plus either the proceeds from the sale of Sassco or equity and debt in the stand-alone Sassco.
Miller said Leslie Fay and the unsecured creditors’ committee have reached “an agreement in principle on the broad outline of a plan” but that no agreement on the precise size or nature of the payout has been forged.
Equally important, Leslie Fay said the unsecured creditors’ committee has approved its revised five-year financial projections, which will become the basis for the plan or reorganization. These projections are not disclosed.
“Although the debtors do not believe that these processes will be even close to completion in the next 70 days,” the extension would allow significant progress to be made, Miller said in court papers. — Fairchild News Service