Betsey Johnson LLC, the bankrupt women’s fashion retailer, won approval to sell all of its merchandise to a joint venture formed by liquidators Hilco Merchant Resources LLC and Gordon Brothers Retail Partners LLC.
U.S. Bankruptcy Judge James Peck in Manhattan today approved the deal after lawyers for the company said it was the best one achieved through an auction. Liquidating sales will start tomorrow.
Betsey Johnson will get 102 percent of the merchandise’s cost value, estimated at as much as $6.7 million, according to court papers. Hilco and Gordon will make an upfront payment of $5.2 million immediately. If proceeds exceed the 102 percent threshold, while covering expenses and Hilco and Gordon’s fees, the liquidators will keep 70 percent of the excess amount and Betsey Johnson will get the remainder, court papers show.
“It looks as if the auction process was a very successful one,” Peck said.
The deal was reached after nine rounds of bidding that started with an initial guaranteed percentage of 89 percent, James Wallack, a lawyer for Betsey Johnson with Goulston & Storrs PC, told Peck. Liquidators take on selling costs for merchants to quickly sell merchandise.
Betsey Johnson listed assets and debt of as much as $50 million each in its April Chapter 11 filing. Formed as B.J. Vines in 1978, the company sells clothing, footwear, handbags and a signature fragrance through 66 Betsey Johnson boutiques, according to the company’s website.
In 2010, Steven Madden Ltd. a footwear designer and marketer, swapped $27.6 million of secured debt for ownership of Betsey Johnson’s trademarks and intellectual property. The unit that filed for bankruptcy isn’t part of Steven Madden.
Betsey Johnson joins other troubled retailers that have sought bankruptcy protection in past years, including Loehmann’s Holdings Inc. and Escada USA, the luxury clothing maker.
The case is In re Betsey Johnson LLC, 12-11732, U.S. Bankruptcy Court, Southern District of New York (Manhattan).