Meanwhile, the proverbial fly in the ointment appeared in the Footstar bankruptcy case as GE Capital Corp., which holds the lease for “certain furniture, fixtures and equipment” with FTS. GECC filed a number of objections to the proposed bidding process for liquidators that is expected to be completed this Tuesday, March 16. Bids and deposits were due last Thursday.

In their arguments, GECC objected to the Court’s Order to Shorten Time that enabled FTS to reduce the notification period for any asset sales from the customary 20 days to an expedited seven day period.

GECC also took issue with Footstar’s plans to reject portions of their lease that apply to the 165 stores destined for closure. GECC argues that FTS either needs to accept or reject the ENTIRE lease. They further argued that FTS could not sell the equipment they do not own.

Central to their argument is that GECC does not feel Footstar has “demonstrated a sufficient justification for the auction and sale”. They object in part on grounds that FTS did not meet the standards to justify the auction, including, but not limited to, showing a good business purpose for the sale or proving an adequate price to be paid for the assets.

GECC called the original FTS arguments “self-serving” and charges that the motion for the asset sale “does not contain a clear description of the assets” that FTS proposes to sell. GECC also charges that FTS has no “showing of good faith” in their motion for the Bidding Procedure and Sale.

The Court will have to move fast here. Even though the bids were due last week, at press time the procedure has not yet been approved by the Court.

A number of landlords also filed motions Friday objecting to the expedited process and the lack of notification required for adding or deleting stores to be closed and a lack of any “proposed procedure regulating the conduct and manner of the liquidation sales” among other items.
Arguments are to be held during a hearing scheduled for March 17, the day after a winning bid for the GOB liquidator will be chosen.