Bay Harbour Management and York Capital Management plan to acquire the assets of Steve & Barry’s for $168 million out of bankruptcy, but the plan came under heavy scrutiny on Thursday by a bankruptcy court judge.
Steve & Barrys reported late Friday that the judge had okayed the sale.
U.S. Bankruptcy Judge Allan Gropper on Thursday balked at a plan to sell the Steve & Barry’s assets to BHY S&B Holdings LLC, a newly formed affiliate of Bay Harbour and York. Gropper had objected to a provision that would remove legal claims against the company’s executives, including S&B co-founders Steve Shore and Barry Prevor, who are also investors in BHY S&B Holdings.
The retailer had filed for bankruptcy protection in July. More than 100 of Steve & Barry’s 276 stores will likely close as the company focuses on its most profitable locations.
“The unsecureds are getting little enough here, Gropper said. The deal would have returned about 2 cents on the dollar to unsecured creditors. “There are some principals of Chapter 11 that simply cant be ignored, he continued.
Gropper said S&B hadnt given enough notice of its plan to sell all its rights to legal claims.
Under the deal, the co-founders will retain a 10% stake in BHY S&B Holdings, and will continue to play a role in managing the retailer.
The sale includes all merchandise from stores, and all intellectual property rights, including celebrity and brand licenses. It will also acquire key facilities including the Port Washington, NY headquarters, a Columbus, Ohio distribution center, and certain overseas offices.
Steve & Barry’s indicated it is assessing an issue with New York Knick’s Stephen Marbury. The guard’s Starbury footwear line was the chain’s first celebrity endorsed product. Last week, Marbury filed a motion in Manhattan’s bankruptcy court objecting to the sale, claiming he’s owed $2 million in royalty fees.
