A key creditors' committee has sent a sharply worded letter to Allen Questrom, chief executive of Federated Department Stores, which is mired in Chapter 11 bankruptcy reorganization. In the letter, the creditors expressed their dismay over Federated's reorganization plan, filed in bankruptcy court on Apr. 29. The committee represents a 92-member bank syndicate led by Citibank.
The reorganization plan, which the banks call "grossly inadequate," promises to pay them 58~ on the dollar in cash and new debt for the $1.5 billion they're owed. The balance would be payable in stock. Citibank suggests that Federated instead sell one or more of its chains. Until now, though, Questrom has resisted all calls for a breakup of the retailer.