Shiekh Shoes, in bankruptcy proceedings since November 29, is now exploring a sale of the chain as well as a reorganization with current owners.
In an affidavit filed with California Central Bankruptcy Court, Sheikh Ellahi, founder and CEO, wrote that the company recently began working with its bankruptcy professionals and the Unsecured Creditors Committee to develop a sale and marketing process. The marketing efforts will be aimed at a targeted, limited group of approximately 30 strategic and financial investors with the means to acquire and potential interest in acquiring Shiekh Shoes’ assets.
Ellahi said the company’s “primary goal at this time continues to be a viable reorganization. The motion and the marketing process, however, are being presented as a backup to this primary goal and both approaches will be pursued contemporaneously. The debtor may discontinue the marketing and sale process at any time.”
The filing noted that the interested bidders will have to sign non-disclosure forms. The process will also include some restrictions on access to “overly sensitive” information, including identifiable store-level financial information, “until the prospective bidder submits a letter of intent satisfactory to the debtor, and the sale parties unanimously determine that such information should be provided.”
Shiekh Shoes blamed its bankruptcy filing on a failed expansion into the Midwest, heightened competition from online retailers and a generally tough retail climate. The company is holding going-out-of-business sales at 31 locations, and those sales are expected to be completed by the close of January. When it filed for bankruptcy, it had 125 doors.
The retailer has also rejected two store leases, in San Diego and Portland, OR, and has hired Gordon Brothers to assist in negotiations with landlords over restructuring other leases.
A court hearing to set up bidding procedures will take place on January 25. The deadline for interested buyers to submit bids is predicted to be set for February 20. An auction, if necessary, would take place February 23, and a sale hearing would be set for March 1.
Photo courtesy Shiekh Shoes