Last week I posted here about the results of the auction of the assets of Family Christian Stores, which has been operating in Chapter 11 bankruptcy for some months. (That link leads to many others on this case.)
As I predicted, the debtor itself, Family Christian Stores (FCS) and its senior lender (both of which are affiliated with Richard Jackson) and its consignment vendors claim that the bid by yet another Jackson-affiliated entity was the best. The liquidator-bidders, the face of amount of whose bid was $6 million more than Jackson's, beg to differ.
The decision of FCS to accept Jackson's bid is subject to bankruptcy court approval and a hearing on whose is bigger took place last week. The court has taken the matter under advisement. Read a short account from Reuters here.
What Reuters also reports is the equivalent of an attack on honor: in addition to objecting to acceptance of Jackson's bid, the losing liquidator-bidders have moved for the appointment of a trustee. Trustees are rarely appointed in Chapter 11 cases and then only when the debtor is guilty of gross misconduct. Years ago the sorts of assertions that accompany a motion for a trustee would have culminated in a duel.
The losing bidders will certainly lose this motion. I'm confident of this prediction because one more--very important--constituency supports the sale of FCS to the Jackson entity: the creditors' committee. The creditors' committee is charged with promoting the interests of all unsecured creditors. With its support, the decision of FCS to sell itself to its former owner and largest creditor will almost certainly be blessed by the bankruptcy court. And with that, the motion for a trustee will fall by the wayside.
As I predicted, the debtor itself, Family Christian Stores (FCS) and its senior lender (both of which are affiliated with Richard Jackson) and its consignment vendors claim that the bid by yet another Jackson-affiliated entity was the best. The liquidator-bidders, the face of amount of whose bid was $6 million more than Jackson's, beg to differ.
The decision of FCS to accept Jackson's bid is subject to bankruptcy court approval and a hearing on whose is bigger took place last week. The court has taken the matter under advisement. Read a short account from Reuters here.
What Reuters also reports is the equivalent of an attack on honor: in addition to objecting to acceptance of Jackson's bid, the losing liquidator-bidders have moved for the appointment of a trustee. Trustees are rarely appointed in Chapter 11 cases and then only when the debtor is guilty of gross misconduct. Years ago the sorts of assertions that accompany a motion for a trustee would have culminated in a duel.
The losing bidders will certainly lose this motion. I'm confident of this prediction because one more--very important--constituency supports the sale of FCS to the Jackson entity: the creditors' committee. The creditors' committee is charged with promoting the interests of all unsecured creditors. With its support, the decision of FCS to sell itself to its former owner and largest creditor will almost certainly be blessed by the bankruptcy court. And with that, the motion for a trustee will fall by the wayside.
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