Kasper files second reorganization plan

By Carlise Newman

Chicago, Sept. 15 - Kasper ASL Ltd. filed its second amended and restated reorganization plan and disclosure statement, which plans a distribution of the proceeds and net of certain expenses of the sale of the company.

On Aug.7 an auction was conducted and Jones Apparel Group Inc. was determined to have submitted the highest bid. The company entered into an agreement to be acquired by Jones for $204 million in cash and the assumption of deferred liabilities, primarily pre-paid royalties, projected to be $11.5 million at closing, for a value of $215.5 million.

The plan requires the approval of the majority of the New York-based apparel company's creditors and confirmation by the bankruptcy court. The company said in a news release it anticipates that the transaction will be completed before the end of the year.

The ultimate distribution of the estate is contingent on:

* Resolution of the Internal Revenue Service's proposed adjustment. During the fiscal year ended Dec. 28, 2002, the IRS issued a proposed adjustment that would have resulted in additional federal and state income taxes and reduced net operating loss carryforwards. On Nov. 22, 2002, the company filed an objection to the IRS claim. The company continues to talk with the IRS, but any adjustment may result in the disallowance of certain deductions and result in additional tax payments. If Kasper does not reach a resolution, the adjustment would result in additional tax payments and reduce the company's net operating loss of $39 million at December 28, 2002 by $34.1 million.

* Determination of the senior notes interest by the bankruptcy court. Kasper estimates that the senior notes claims are $136 million, which includes prepetition interest calculated at the non-default rate, and does not include any postpetition interest, including interest on interest, or interest at the default rate, to which holders may be entitled. The court may award prepetition interest on interest, postpetition interest, including interest on interest, and may use the default rate of interest, in which event the company estimates the senior notes claims at closing would be $179 million. Interest will be paid in such amounts and at such rates as determined by the bankruptcy court.

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