LNT sale hearing set for Friday
By Staff -- Home Textiles Today, 10/8/2008 2:44:00 PM
Wilmington, Del. — One objection has so far been filed for the bankruptcy court hearing to take place Friday morning on the Linens ’n Things asset sale procedures to liquidate or find a last-minute buyer to keep at least some of the remaining 371 stores open.
Today is the deadline for a stalking horse bidder to emerge and as of early afternoon, the court had not posted any notices of a bidder to the docket. Most in the industry, including executives close to the LNT bankruptcy process, acknowledge that going-out-of-business sales and store liquidations will be the likely result.
The objection was filed by LNT landlords seeking to limit the negative impact of the GOB sales in their shopping centers by controlling, for example, the signage.
LNT said yesterday that it could not win support from its noteholders’ committee for the reorganization plan it put out about five weeks ago and, faced with defaults under its DIP credit facility, had decided to liquidate or auction the chain in a forced Section 363 sale.
Section 363 of the bankruptcy code contains “cram down” provisions that enable the court to sidestep creditor approval or a reorganization plan. To date, LNT has shuttered nearly 40% of the chain — 218 stores.
Among other things, LNT’s proposed reorganization would have provided for a 100% debt-to-equity swap for secured creditors, and stock warrants for unsecured creditors.