(Updates with details from court papers in second paragraph.)
June 27 (Bloomberg) -- Signature Styles LLC, the owner of the Spiegel catalog, shouldn’t receive approval of proposed bidding procedures for the “rushed” sale of its assets, the U.S. Trustee overseeing the bankruptcy case told a judge.
U.S. Trustee Roberta A. DeAngelis asked the U.S. Bankruptcy Court in Wilmington, Delaware, to reject the proposed procedures filed by the company, according to documents filed June 25.
Signature Styles asked for permission to designate Artemiss LLC the stalking-horse, or lead bidder, to buy the company. The fund, affiliated with Patriarch Partners LLC, has a contract to buy the business in return for assumption of about $30 million in financing obligations and as much as $10 million in customer obligations, court papers show.
“Such a brief sale process is insufficient to allow the debtors to reach all potential purchasers, and for all potential purchasers to adequately perform due diligence,” DeAngelis said in court papers. The trustee also objects to the request to pay Patriarch an expense reimbursement of as much as $300,000.
“Regardless of the outcome of the auction, Patriarch will benefit,” DeAngelis said. “Either Patriarch will be the winning bidder, or if it is outbid, the additional proceeds will be used to pay down Patriarch’s secured claim,” she added.
Signature Styles, based in New York, listed assets of $48.6 million and debt of $87.6 million in Chapter 11 documents filed June 6. It purchased the Spiegel business for $21.7 million at a foreclosure sale in June 2009.
‘Chilling’ of Bidding
“The net result will be a chilling of competitive bidding, and the elimination of competition to Patriarch’s bid” DeAngelis said. The lenders and equity holder are Patriarch affiliates, court documents show.
The company’s other businesses include Newport News and Shape Fx. Spiegel produces 75 percent of revenue, a court filing said.
The case is In re Signature Styles LLC, 11-11733, U.S. Bankruptcy Court, District of Delaware (Wilmington).
--With assistance from Bill Rochelle in New York. Editors: Stephen Farr, Glenn Holdcraft
To contact the reporter on this story: Dawn McCarty in Wilmington, Delaware, at firstname.lastname@example.org
To contact the editor responsible for this story: John Pickering at email@example.com