Icahn green-lighted to sell some WestPoint assets 

By Staff -- Home Textiles Today, 10/16/2007 12:44:00 PM

Wilmington, Del.—A chancery court judge in Delaware has raised the dollar limit on WestPoint International’s ability to sell off assets without court or creditor approval, according to documents filed with the Securities and Exchange Commission by WestPoint parent Icahn Enterprises.

The court, in New Castle County, raised the limit from $5 million to $20 million for the outright sale of WPI assets.  The judge also raised the limit on asset transfers to $30 million.

The modified order comes amid indications in court documents and in securities filings that the company may be in negotiations to sell off its 30 retail stores (HTT, Oct. 15, 2007, page 2). WestPoint executives would not comment for publication on that prospect.

The court’s action is the latest in a long series of disputes involving WestPoint and its owner, corporate activist Carl Icahn, and other first-tier secured creditors of WPI, which are represented by Beal Bank. Icahn acquired WestPoint in 2005 in a hotly contested bankruptcy auction.

Earlier this month, a federal district court in New York upheld a ruling that terms of the sale to Icahn be reviewed by the bankruptcy court. Among the new findings was a determination about how proceeds from the WestPoint sale should be divided among secured lenders, including Icahn and Contrarian Funds, one of the largest secured creditors of WestPoint.

In the current SEC filing, Icahn Enterprises stated that it holds about 40% of the outstanding first-lien debt and about 51% of the second-tier debt.

Both Icahn and Contrarian can appeal the decision.