Accord reachedThe long, contentious bankruptcy of Liberty House suddenly came much closer to a conclusion this morning when opposing sides in the 3-year case said they have agreed to settle.
on Liberty House
Terms of the settlement
in the bankruptcy case go
to the court tomorrow
By Tim Ruel
Under the deal, reached over the weekend, Liberty House's lenders would take ownership of the retailer.
The current owner, Chicago-based JMB Realty Corp., would lose its equity interest in the company, but take a multimillion-dollar payout.
"We will present the terms of the settlement in court tomorrow and a new, broadly consensual plan of reorganization later this week," Liberty House President John Monahan said in a statement today.
In a short hearing in bankruptcy court this morning, U.S. Bankruptcy Judge Lloyd King agreed to hear the details at a hearing tomorrow at 1:30 p.m. There were no objections.
Attorneys are documenting the reorganization details today in Los Angeles.
"The agreement that we will present tomorrow disposes of all issues that have challenged us in past negotiations and removes substantially all remaining obstacles to confirmation of a reorganization plan for Liberty House," Monahan said.
Liberty House, which filed Chapter 11 reorganization bankruptcy in March 1998, could emerge nearly debt-free as early as the end of April, Monahan said. The company would be valued at $190 million.
Under the settlement, Liberty House owner JMB would lose its interest in the company, but pick up several millions of dollars in payments, including a $5.1 million note.
JMB acquired the kamaaina retailer when it bought out Liberty House's former parent, Amfac Inc., in 1988. Founded in 1849, Liberty House is Hawaii's oldest and largest chain of department stores.
The settlement agreement was disclosed during today's hearing when Judge King was supposed to begin considering approval of a plan brought previously by the lenders to own the company. Settlements in bankruptcy cases often occur at the last minute, attorneys said.
The lenders' reorganization plan, supported in a vote by a majority of creditors in the case, had been opposed by JMB.
Attorneys said details of the settlement with JMB are similar to the lenders' plan.
The lenders, led by Bank of America, have indicated they would run Liberty House upon taking ownership, Monahan said. When asked if they would then sell the company, Monahan declined comment.
None of Liberty House's 18 stores would close under the settlement, and there would be no layoffs, Monahan said.
Early on in the nearly 3-year-old bankruptcy case, Liberty House closed about a dozen stores and laid off 136 workers.
"Many people contributed to achieving the results announced in court today, but the most important contributions came from our employees and our customers," Monahan said.