Syms Seeks Examiner to Probe Management Before Bankruptcy
Syms Corp. (SYMS), the discount clothing chain, is seeking an examiner to investigate management’s decisions before the company filed for bankruptcy last month.
An examiner is needed to determine if there were any “breach of fiduciary duty, mismanagement, waste and any similar claims arising out of the directors’ and officers’ stewardship,” according to court papers filed today in Wilmington, Delaware.
The investigation should go back as far as June 2009, when Syms acquired Filene’s Basement LLC out of bankruptcy, the Secaucus, New Jersey-based company said in court documents.
Syms needs an examiner to determine the validity of accusations by Esopus Creek Value Series Fund LP, the company said in court papers. Esopus, which owns about 1.8 percent of the company’s stock and heads the equity committee appointed to protect shareholders rights in bankruptcy, has repeatedly accused executives of mismanagement.
Esopus filed a complaint just before Syms sought bankruptcy protection seeking to examine its books and records, according to court documents. The shareholder said management failed to integrate Filene’s into Syms operations and made faulty real- estate transactions.
The equity committee and the committee of unsecured creditors are conflicted because of personal interests in the outcome of any potential litigation, the company said in court papers.
“An independent examiner will have no economic motivations, incentives, or biases other than to conduct a fair and impartial investigation,” Syms said.
Syms listed assets of $236 million, including $97.7 million in real estate inventories, and liabilities of $94 million, according to court papers. The company expects shareholders to see a recovery from the bankruptcy.
Syms, founded by Sy Syms in 1958, fell 3.2 percent to $12.25 in over-the-counter trading.
The lead case is In re Filene’s Basement LLC, 11-13511, U.S Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at firstname.lastname@example.org.
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