BRADLEES EXECS SEEK SEVERANCE AS DISCOUNTER ENTERS FINAL DAYS
Byline: Vicki M. Young
NEW YORK — Bradlees Inc. may be going out of business, but that hasn’t stopped the company from seeking court approval for a $2.3 million severance pay distribution among 11 senior executives.
The request was filed last week in Manhattan bankruptcy court by Peter Thorner, chairman and chief executive officer. The request does not include the amount to which Thorner is entitled, which reportedly has been pegged at $6 million.
According to Thorner’s affidavit, the majority of the employment agreements were entered into before the discounter’s first tour of bankruptcy proceedings in 1995. The agreements were later assumed by reorganized Bradlees as an “incentive to retain, or subsequently attract and hire, critical employees” in an uncertain business environment.
The chairman also said that the total dollar amount of the severance packages is $5.8 million, but that Bradlees is asking the court for approval to pay 40 percent of the $5.8 million, or $2.3 million. The affidavit doesn’t say how much would be available in severance payments to the 7,000 plus employees who work at the 105 units being shuttered.
As reported, the Braintree, Mass.-based retailer filed for Chapter 11 on Dec. 26, and is in the middle of winding down its business. The 11 executives who would share in the distribution are: Robert G. Lynn, president and chief operating officer; David L. Schmitt, senior vice president and general counsel; Sandra Smith, senior vice president and general merchandise manager, hardlines; James C. Sparks, senior vice president and general merchandise manager, softlines; Mark E. James, senior vice president, marketing; Judith Dunning, senior vice president, planning and allocation; Alfred Snyder, senior vice president, logistics; Bruce Conforto, senior vice president and chief information officer; Gregory K. Dieffenbach, senior vice president, human resources; Ken Lathan, senior vice president, stores; and Ronald T. Raymond, senior vice president, asset protection.
Bradlees is also seeking bankruptcy court approval for an orderly disposition of its lease interests. Gordon Bros. Retail Partners is conducting the liquidation sales of inventory. The discounter is seeking the OK to enter into an agreement with a third party who will market the leasehold interests. According to court papers, some of the stores may begin closing as early as Jan. 11.
In another retail bankruptcy, General Electric Capital Corp. has filed papers in the Wards Chapter 11 to insure that, as a secured creditor, it will be paid and that its interests will be adequately protected.
According to court papers, GE Capital entered into three different loan agreements totaling $450 million with the mass merchant. As of the date of its filing on Dec. 28, the aggregate amount of the principal and accrued interest owed was $445,753,044. The aggregate amount does not include GE Capital’s costs, professional fees and expenses.
As reported, the Chicago-based retailer threw in the towel and is liquidating 250 units and 10 distribution centers. About 28,000 Wards employees are affected by the closures.
According to the Wards Chapter 11 petition, unsecured trade creditors holding the largest claims include: Hughes Network Systems, Germantown, Md., $5.3 million; Rosy Blue Jewelry Inc., here, $3.5 million; Sag Harbor/Kellwood, here, $2 million; M. Fabrikant & Sons Inc., here, $1.6 million; and Burlington Industries, Greensboro, N.C., $1 million.
Both post-holiday filings highlight the difficult retail environment over the past few months. They indicated that weather and increased competition also played a role in their financial troubles.