Filene's Basement, Syms file amended plan; statement hearing Friday

By Caroline Salls

Pittsburgh, July 12 - Filene's Basement, LLC and Syms Corp. filed an amended plan of reorganization and related disclosure statement on July 12 with the U.S. Bankruptcy Court for the District of Delaware.

As previously reported, the companies' lawyers said on July 9 that Filene's Basement and Syms hoped to file the revised plan and disclosure statement on July 11 or July 12 so that a scheduled hearing for the approval of the disclosure statement on July 13 could move forward without objection.

The proponents of the amended plan are the debtors, their official committee of unsecured creditors and the official committee of Syms equity security holders.

According to the amended disclosure statement, the plan is comprised of two separate reorganization plans, one for Syms, which is solvent, and one for Filene's Basement, which is not.

Since it is solvent, Syms' creditors will be paid in full, while Filene's Basement creditors "are only entitled to a distribution equal to a fraction of their claims," the amended disclosure statement said.

Solvency dispute

The debtors said the creditors' committee disputes that Filene's is insolvent. The committee believes that the Filene's estate holds various claims against the Syms' estate and that recovery on these claims would bring sufficient value into the Filene's estate to enable Filene's to pay its creditors in full.

In the alternative, the creditors' committee believes the Filene's and Syms estates should be substantively consolidated so their assets are combined to pay all creditors of both estates.

To resolve this dispute, Syms said it has agreed that Filene's creditors will share in a portion of the proceeds of Syms' assets, thereby affording Filene's creditors a significantly greater recovery than they would have otherwise received.

Specifically, the amended disclosure statement said Filene's trade creditors and employees will be paid in full over time from proceeds of the disposition of Syms' owned real estate. Holders of lease rejection claims will be paid 75% of the allowed amount of their claims over time, also from proceeds from the disposition of the owned real estate.

As an alternative, Filene's creditors will have the option of accepting distributions from Filene's assets only, which will result in an estimated recovery of between 0% and 2%, while preserving whatever claims they may have against Syms.

Rights offering

As part of the proposed plan of reorganization, the company would issue about 10 million new shares of common stock at $2.49 a share to raise $25 million.

The shares would be issued in a private placement to accredited investors only.

Much of that money is earmarked as new working capital for the reorganized company.

The remainder would be split between the creditors and the company's redemption of the shares held by Marcy Syms.

Creditor treatment

Treatment of creditors under the amended plan will include the following:

• Holders of Syms and Filene's Basement administrative claims, priority tax claims and non-tax priority claims will be paid in full in cash;

• Holders of Syms and Filene's Basement secured claims will either be paid in full in cash, receive the collateral securing the claim or receive another agreed upon less-favorable treatment;

• Holders of Syms convenience claims and general unsecured and Filene's Basement convenience claims will be paid in full in cash, and any amounts not paid by Oct. 1, 2015 will accrue interest at 7%, which will be paid in kind;

• Holders of Syms and Filene's Basement union pension claims will receive quarterly distributions from a pension plan reserve;

• Holders of Syms and Filene's Basement intercompany claims will receive no distribution;

• Holders of Syms stock will retain their shares. The majority shareholder will sell her shares under the rights offering, which will also be offered to shareholders who are accredited investors;

• Holders of Filene's Basement short-term general unsecured claims will have the option of being paid in full in cash over time up to 100% of the allowed amount of the claim, with any amounts not paid by Oct. 1, 2015 accruing interest at a rate of 7%, payable in kind, or being paid their share of the liquidation value of Filene's assets in cash;

• Holders of Filene's Basement long-term general unsecured claims will have the option of being paid in cash 75% of the allowed amount of the claim, with any amounts not paid by Oct. 1, 2015 accruing interest at a rate of 7%, payable in kind, or being paid their share of the liquidation value of Filene's assets in cash; and

• Holders of Filene's Basement interests will retain those interests.

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

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