• Fashionable Deb Shops File for Chapter 11 Bankruptcy

    Deb Shops, a retailer of young-women’s clothing, filed for Chapter 11 bankruptcy protection on June 27, 2011. The senior lenders are taking over operations, nearly four years after the company was purchased by Thomas Lee.

    A group of firms led by Cerberus Capital Management’s Abelco Finance unit is taking over the company through an offer known as a credit bid. Lenders convert the amount owed to them into equity via the credit bid.

    The bid from the lenders is called a stalking-horse proposal. The proposal opens up a court-supervised auction for the purchase of Deb Shops. If Abelco wins the bidding, they will close on the deal in September 2011.

    Mr. Lee’s investment firm, Lee Equity Partners, is to retain an ownership stake in Deb under the terms of the sale agreement. Lee Equity purchased Deb in July 2007 for a price tag of $395 million.

    Deb Shops and other store operators ran into financial difficulties in 2008 as the credit markets tightened and consumers slowed down their spending.

    Deb is insisting that the bankruptcy filing and subsequent sale won’t affect its day-to-day business. Current management is staying and vendors are being paid.

    Deb’s chief executive Mark Hoffman stated, “This is strictly a financial restructuring of Deb Shops business and we foresee no impact on our operations as we proceed through this process.”

    Benjamin Brand Services – Chicago bankruptcy lawyer

  • Sex Abuse Victims of Milwaukee-Area Clergy get More Time to File Claims

    U.S. Bankruptcy Judge Susan V. Kelly has agreed to allow survivors of clergy sex abuse more time to file claims while the Milwaukee Archdiocese is under Chapter 11 bankruptcy protection. A forensic accountant will be hired to review the finances of the archdiocese as well.

    The agreement gives the creditors the green light to hire California-based Berkeley Research Group as a financial adviser. One of the duties of the forensic accountant is to inspect church finances to determine if the church made fraudulent transfers in an attempt to shield assets from victims of clergy sex abuse.

    All parties involved in the bankruptcy agreed to extend the bar date, the deadline for victims to file claims for compensation. The final day for filing claims is now February 1, 2012, five months past the September 15, 2011 date initially proposed by the church. The deadline for all non-sex abuse claimants remains the same.

    The specific of a national advertising campaign to alert victims to the bankruptcy and the deadline for claims has been agreed upon.

    Milwaukee Archdiocese filed for bankruptcy in January 2011, saying it was the only way to compensate victims and continue the work of the church. The archdiocese has stated that they only have approximately $7 million in cash and properties available for settlement.

    Benjamin Brand Services – Chicago bankruptcy lawyer