Filene's, Syms disclosure statement hearing delayed; talks ongoing

By Jim Witters

Wilmington, Del., July 6 - The hearing for consideration of the Filene's Basement, LLC and Syms Corp. disclosure statement scheduled for July 9 has been canceled, despite a "handshake agreement" among the parties that resulted from a mediation session in late June.

During a hearing July 6 in the U.S. Bankruptcy Court for the District of Delaware, debtors attorney Jay M. Goffman said that the mediation resulted in "a business deal," and the parties spent the next 10 days trying to hammer out the final documents for court approval.

But most agreed that even with attorneys working through the weekend, those documents will not be ready for presentation at the disclosure statement hearing scheduled to begin at 11 a.m. ET on July 9.

Instead, judge Kevin J. Carey will conduct a telephonic status conference at that time to determine how much work remains. He also ordered Goffman to email him at 5 p.m. ET on July 8 with an update on the weekend's progress in the case.

The official committee of unsecured creditors sought a delay until July 13, and Goffman said he believes everything should be in place by then.

Carey said he would consider the scheduling issue during the July 9 status conference.

Delay 'unavoidable'

Thomas B. Walper, representing the official committee of equity security holders, opposed the delay, saying the $750,000-a-week burn rate in the case is eating away his clients' potential recovery.

Walper said that his clients also are concerned about the "delicate timetable" associated with the effort to raise capital as part of the reorganization plan.

The schedule includes confirmation of a Chapter 11 plan by the end of August, he said.

Mark T. Power, representing the official committee of unsecured creditors, said the mediated deal involves "a complicated reorganization with lost of moving pieces."

The plan being devised calls for the equity committee to run the business for several years, Power said.

"They want more freedom, and we want some more limitations," he said.

Power said that after the lawyers complete the documents, he must still conduct a creditors' meeting to get the committee's input and approval.

"We found ourselves in an untenable position (on July 5)," Power said. "We just ran out of time. There is no other option."

Other rulings

Also during the hearing, Carey suspended the objection deadlines for other issues in the case, so the attorneys can concentrate on finishing the final documents to be presented at the disclosure statement hearing.

Goffman made a motion during the hearing to continue through July 31 the debtors' exclusive periods for filing a Chapter 11 plan and for soliciting votes on that plan. Carey said he would consider that motion on July 9.

Other matters continued are the following:

• The creditors committee's motion to disband the equity committee or limit its scope;

• The debtors' motion to appoint an examiner to investigate possible estate causes of action; and

• The creditors committee's motion to terminate exclusivity.

Syms, a Secaucus, N.J.-based off-price clothing retailer, filed for bankruptcy on Nov. 2, 2011 in the U.S. Bankruptcy Court for the District of Delaware, along with wholly owned subsidiary Filene's Basement. The joint Chapter 11 case number is 11-13511.

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