Levitz Home Furnishings senior secured noteholders object to Prentice bid for assets

By Caroline Salls

Pittsburgh, Nov. 30 - Levitz Home Furnishings, Inc.'s ad hoc committee of senior secured noteholders objected to the bid of Prentice Capital Management, LP and The Pride Capital Group, LLC for substantially all of Levitz's assets, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

"Since its inception, the outcome in this case has been controlled by one party - Prentice," the committee said in the objection.

"After insisting on onerous deadlines for a sale as part of debtor-in-possession financing, Prentice sought out a way to ensure no fair sale process could be achieved by the [company].

"Although the court inquired about this very issue during the first-day chambers conference, the court was only advised of the technical terms of the DIP financing documents (which appeared on their face to leave open the possibility for a level playing field), not the way in which Prentice would later manipulate this process."

According to the objection, Prentice "locked up" General Electric Capital Corp. to ensure that no interested bidder could look to the company's incumbent asset-based lender to provide replacement, acquisition or exit financing.

"With a mere three days (including Thanksgiving Day) to work, the challenge for interested bidders to come up with a binding offer to refinance GECC through a wholly new lender, and then to acquire all of the assets of the [company] was an insurmountable hurdle," the committee said in the objection.

The committee also said that it was never consulted or even notified that "this illicit agreement among all likely bidders for store liquidation was in the works."

Levitz, a Woodbury, N.Y., furniture retailer, filed for bankruptcy Oct. 11. Its Chapter 11 case number is 05-45189.

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