But Liberty House wantsBy Rick Daysog
the judge's approval for
a different lender
Liberty House lenders, who are seeking control of the retailer, are offering to provide as much as $50 million in financing to help the company continue operations.
The lenders -- led by Bank of America and Merrill Lynch -- said in a court filing that their loan has more favorable terms than one sought by Liberty House from other lenders.
Liberty House is seeking bankruptcy court approval for $50 million in financing from General Electric Credit Corp.
A hearing on the GECC loan was to be held here this afternoon in U.S. Bankruptcy Court.
Bank of America's attorneys said the interest rate on their loan is half a percent lower for the first $25 million than the rate on the GECC loan. But the Bank of America loan requires that Liberty House give up the right to litigation regarding that financing.
"Our bank and GECC will be rolling the dice as to who can offer the best terms," Edward Sutherland, attorney for Bank of America, said this morning.
Last week, the lenders moved to replace Liberty House's six-member board with three directors they had selected.
The creditors alleged Liberty House had been in default on $173 million in loans and that they had the right to control the company under the terms of their loan.
The lenders' attorneys said they don't plan to liquidate the company but want see it reorganized.
Liberty House has said it needs the $50 million in financing to allow operations to continue uninterrupted. With the downturn in purchases from Asian tourists, Liberty House said it hasn't been able to service its debt.
What's more, the economic hardships prompted trade vendors such as clothing designers and footwear companies to hold back merchandise and even request cash advances, worsening Liberty House's liquidity.