(Updates with judge in second paragraph.)
Feb. 2 (Bloomberg) -- United Retail Group Inc., owner of the Avenue plus-size women’s clothing stores, can borrow $25 million on an interim basis in bankruptcy, subject to a final agreement with its lender, a judge said.
U.S. Bankruptcy Judge Stuart Bernstein said in Manhattan court today said he was prepared to approve the loan subject to minor changes in the wording of the agreement. United Retail said it needs the loan, which may rise to as much as $40 million on a final basis, to keep operating as it tries to sell itself to the highest bidder.
“Obviously I need to see a blackline and a final order,” Bernstein said, questioning the terms of the loan under which its lender, Wells Fargo & Co., which also lent the company money prior to its bankruptcy, will roll its old debt into the new loan. A blackline is an edited document that shows the changes that have been made.
The owner of 433 stories has struggled with liquidity issues since its 2007 purchase by Redcats USA, according to court papers. Redcats USA wants to sell the business to focus on other brands, and Avenue has battled competition from large national chains with greater resources leading up to the bankruptcy, lawyers for the company wrote.
An affiliate of Versa Capital Management, a Philadelphia- based private-equity firm, agreed to serve as the lead, or stalking-horse, bidder in a court-supervised auction, United Retail said in a statement when it sought Chapter 11 protection Feb. 1.
The company, based in Rochelle Park, New Jersey, listed assets of $117.2 million and debt of $67.3 million in its bankruptcy petition.
Redcats, a division of French retailer PPR SA, is a catalog and online marketer of clothing and home products with other brands including Roaman’s, Jessica London, BrylaneHome, KingSize, the Sportsman’s Guide and OneStopPlus.com. PPR, based in Paris, is the owner of the Gucci luxury brand.
The case is In re United Retail Group Inc., 12-10405. U.S. Bankruptcy Court, Southern District of New York (Manhattan).
--Editors: John Pickering
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