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The owner of Ala Moana Center is offering to buy bankrupt Liberty House Inc. for $195 million.
The owner of Ala Moana
Center offers $195 million
for the retailerBy Rick Daysog and Rob Perez
Star-BulletinIn a filing in U.S. Bankruptcy Court yesterday, Chicago-based General Growth Properties Inc. said it is prepared to pay $100 million in cash and put up a $95 million note to purchase the 150-year-old department store chain.
The proceeds would go to a newly formed creditor trust, which would then distribute the funds to Liberty House's creditors.
Although the precise amount that is owed creditors is difficult to pinpoint, this sale would come close to repaying creditors entirely for what they are owed, said Michael Molinaro, an attorney with a Chicago law firm that represents General Growth.
"We think our approach provides more cash to the creditors than those other plans," said Molinaro said.
To become effective, the plan would need a variety of approvals, including that of the bankruptcy court.
According to the proposal, the deal must close before March 31, 2001, Molinaro said.
The surprise proposal is one of several being offered that would allow Liberty House to emerge from bankruptcy reorganization.
Liberty House's owner JMB Realty Corp. and its lenders have submitted separate reorganization plans.
Tom Roesser, an attorney representing the retailer's major lenders, also had no response. Chuck Choi, the lawyer representing the retailer's unsecured creditors, also had no immediate comment.
John Monahan, Liberty House's president, declined to comment because he is still reading through the General Growth plan. He said today that he just found out about the plan right before it was filed by General Growth.
Liberty House filed for Chapter 11 reorganization bankruptcy in March 1998, listing $284.2 million in assets and $248.4 million in liabilities. The case has been mired in a court fight between two opposing boards of directors, one representing owner JMB Realty Corp. of Chicago, the other representing the chain's major creditors, led by Bank of America.
The opposing reorganization plans are scheduled to be discussed at a hearing before Bankruptcy Judge Lloyd King tomorrow.
Legal and other bankruptcy-related fees have topped $9 million.
General Growth bought Ala Moana Center for $810 million last year from Japan's Daiei Inc.
General Growth's proposed purchase of Liberty House could pave the way for major expansion at Ala Moana Center. General Growth is the landlord of Liberty House's flagship Ala Moana store. Over the past several years, Liberty House has successfully blocked General Growth's attempts to attract a large scale department store planned by Nordstrom Inc.
