Tom's Foods requests court OK for proposed $15 million asset sale

By Caroline Salls

Pittsburgh, Sept. 16 - Tom's Foods, Inc. requested court approval of bidding procedures and its choice of its debtor-in-possession financing lenders as the stalking horse bidders for the proposed $15 million sale of all of its assets, according to a Friday filing with the U.S. Bankruptcy Court for the Middle District of Georgia.

According to its motion, the unexpected erosion of the company's business has been compounded by the unforeseen effects of Hurricane Katrina on its operations.

"The company is suffering from strained liquidity and will run out of cash to fund its operations sooner than originally anticipated," the motion said.

Tom's is in default on the DIP financing with Fleet Capital Corp., and the lenders are owed $22 million.

The stalking horse bid will include an initial credit bid of $15 million, plus assumption of all trade accounts and operating expenses, all obligations assumed under executory contracts, not to exceed $2.2 million, all unpaid employee payroll expenses and all employee benefits, not to exceed $3.45 million.

The stalking horse bid will also include $2.3 million in cash for professional fees and operating expenses.

Bids other than the DIP lenders' must include a cash component that is not conditioned on third-party financing.

Each subsequent bid must include a cash component of at least $200,000 more than the previous bid.

Each bid must include a $1.93 million deposit.

Tom's, a Columbus, Ga.-based snack food company, filed for bankruptcy on April 6. Its Chapter 11 case number is 05-40683.

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