Syms creditors ask court to disband or limit official equity committee

By Caroline Salls

Pittsburgh, Nov. 28 - Syms Corp. and Filene's Basement, LLC's official committee of unsecured creditors is asking the U.S. Bankruptcy Court for the District of Delaware to either disband the official equityholders' committee appointed by the U.S. Trustee or limit the equity group's scope and duties, according to a Nov. 23 court filing.

"Here, unlike most of the handful of potentially solvent cases where equity committees are appointed, the debtors' management and directors own nearly 55% of the publicly traded common stock of Syms," the creditors committee said in the motion.

"Under applicable state law, management owes fiduciary duties to all shareholders equally and majority-controlled shareholders owe similar duties to minority shareholders.

"Consequently, the interests of management and the debtors' board of directors are directly aligned with the interests of the Syms' minority equity holders."

In addition, the creditor group said the companies' management has hired a team of highly qualified counsel and advisers to represent the interests of Syms and Filene's Basement and their stakeholders, including all equityholders.

The unsecured creditors said the debtors' management and professionals are more than capable of representing the interests of all shareholders to the extent there are issues between the equityholders and creditors regarding the proposed distribution of value in a plan.

"There is simply no justification for burdening the estate with yet another layer of professionals for the equity committee, who will be charged with the very same tasks," the creditors said in the motion.

A hearing is scheduled for Dec. 14.

Syms, a Secaucus, N.J.-based off-price clothing retailer, filed for bankruptcy on Nov. 2, along with wholly owned subsidiary Filene's Basement, LLC. The joint Chapter 11 case number is 11-13511.

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