Harry & David Holdings Inc., the gift-box retailer that began selling fruit by mail in the 1930s, won court permission to send its bankruptcy-exit plan to creditors for a vote.
U.S. Bankruptcy Judge Mary Walrath today gave the company permission to seek the vote on a reorganization plan that would give the company to senior noteholders in exchange for canceling more than $200 million in debt. Creditors have until the end of July to vote, company attorney Brad Erens said in an interview. The exact deadline will be set soon, he said.
The main opposition to the plan comes from the Pension Benefit Guaranty Corp., the federal agency that would be forced to take over payments to Harry & David’s pension if Walrath grants the company’s request to cancel the retirement program. The PBGC says Harry & David would owe $45 million should the pension plan be canceled, a figure the company disputes.
“We think the amount of the claim that PBGC is asserting is way overstated,” Erens said.
Harry & David, based in Medford, Oregon, filed for bankruptcy in March, blaming competition from Internet retailers, warehouse-style stores and the recession.
Walrath will take the vote of creditors into consideration when she holds a hearing on Aug. 11 to decide whether to approve the reorganization plan.
The case is In re Harry & David Holdings, Inc., 11-10884, U.S. Bankruptcy Court, District of Delaware (Wilmington).