Pennies From A Five And Dime Czar?
IRATE INVESTORS planning to sue financier Meshulam Riklis over E-II Holdings will probably end up with far less than they seek. When Riklis controlled E-II, parent of luggage maker Samsonite, he moved millions from its coffers to prop up other ailing Riklis outfits--chiefly, five-and-dime-store chain McCrory. After E-II emerged from Chapter 11 in 1993, independent of Riklis and renamed Astrum, the court set up a trust to sue him on behalf of E-II bondholders for the lost money. Depending on estimates, claims against him run from $200 million to $900 million.
But bondholders and lawyers close to the situation doubt the onetime billionaire has the assets to repay even the lower figure. "We don't expect that much," says one. New York-based McCrory, Riklis' sole remaining major asset, is in bankruptcy itself. Riklis contends it was O.K. to make financial transfers within his own empire.
Riklis' lawyer in the McCrory case argues that the Astrum stock and notes that creditors got post-Chapter 11, then valued at 75 cents on the dollar, have appreciated and made them whole. Creditors say that's irrelevant--he wrongfully impaired E-II. Still, even if Riklis gives them zero, the trust has some $50 million to pay them. The bulk of it is from McCrory, settling a claim in the E-II bankruptcy.