Filene's Basement, Syms disclosure statement for amended plan approved

By Lisa Kerner

Charlotte, N.C., July 13 - Filene's Basement, LLC and Syms Corp.'s disclosure statement was approved by the U.S. Bankruptcy Court for the District of Delaware, according to a Friday court filing.

A plan confirmation hearing will be held on Aug 29.

The companies filed an amended plan of reorganization and related disclosure statement on Thursday so that Friday's disclosure statement could move forward without objection.

Proponents of the amended plan include the debtors and the official committee of Syms equity security holders.

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

Syms' creditors will be paid in full, while Filene's Basement creditors will be entitled to a portion of their claims.

The creditors' committee disputes that Filene's is insolvent and believes that the Filene's estate holds various claims against the Syms' estate. Recovery on these claims would enable Filene's to pay its creditors in full, according to the committee.

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

In order to resolve the dispute, Syms agreed that Filene's creditors will share in a portion of the proceeds of Syms' assets, giving Filene's creditors a significantly greater recovery than they would have otherwise received.

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.

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 cash reserves established by the plan;

• 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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