CPI Corp.'s $3.3 million asset sale approved over landlord objections

By Jim Witters

Wilmington, Del., July 25 - CPI Corp.'s Chapter 7 trustee won approval of a $3.3 million asset sale to Lifetouch Portrait Studios Inc., according to documents filed July 25 with the U.S. Bankruptcy Court for the District of Delaware.

In a letter, judge Brendan L. Shannon overruled objections to the sale from several CPI landlords who were seeking immediate payment of rent incurred after the bankruptcy filing.

Payment of the rent would create a super-priority claim for the landlords, superseding the debtor's administration obligations, Shannon wrote.

Denial of the sale would "yield a demonstrably worse economic and practical result," and the landlords still would not receive the rent due, the judge wrote.

The parties are to confer and submit a sale order for court approval.

Lifetouch, based in Eden Prairie, Minn., bills itself as the world's largest employee-owned photography company.

CPI trustee Charles A. Stanziale, Jr. said Lifetouch is buying photographic, studio and office equipment and other assets that currently are scattered across the country at former CPI studios.

The sale proceeds go first to Bank of America, NA, as administrative agent for certain lenders.

Any remaining funds will be used by the trustee to first pay the trustee's expenses, then make partial repayment of the prepetition debt, according to court documents.

CPI, a St. Louis-based portrait studio operator, filed for bankruptcy on May 1. Its Chapter 7 case number is 13-11158.

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