NEW YORK — A judge is expected to approve Malden Mills Industries’ reorganization plan in the coming days and sources within the company said the firm will exit bankruptcy by late May.
Malden filed its plan late Friday in U.S. Bankruptcy Court in Worcester, Mass., that will allow the fleece maker to exit Chapter 11. Malden submitted three previous reorganization plans, although they were each amended and the firm’s Feb. 18 deadline to file was postponed until last Friday.
The plan has an exclusive option for chairman Aaron Feuerstein to regain control of the company from secured lenders and unsecured creditors for $92 million; however, he must do so before July 30 or the figure increases. In total, he has three years to buy back the company. According to Malden Mills business manager David Costello, Feuerstein has raised more than half the $92 million and could have the entire figure when the company emerges from court protection.
When the company exits Chapter 11, Malden’s main lender, GE Capital, the finance arm of General Electric, will own 93.5 percent and Feuerstein will own the remaining 6.5 percent. Once he exercises his option to buy back the company, he will own Malden outright, as he did before the company filed for Chapter 11 in November 2001, when it had a debt load of $140 million.
The reorganization plan also mandates that Feuerstein step down as chief executive officer, but he will remain chairman and president of the company. According to Costello, if Feuerstein successfully regains control of the company he will resume his role as ceo.
Malden is based in Lawrence, Mass., and is best known as the marketer and manufacturer of its Polartec brand fabrics. It currently has a sales volume of about $168 million.