Spiegel Inc. has filed a plan for reorganization with the U.S. Bankruptcy Court in New York. A hearing is set for March 29.
Under this plan, the Downers Grove, IL cataloger and retailer will establish a new parent company Eddie Bauer Holdings, Inc.
In addition, Spiegel Inc.’s general unsecured creditors–excluding Spiegel Holdings–will recover approximately 90% of their allowed claims for about $1.28 billion cash and stock. This is expected to amount to 52% cash and 48% stock.
In addition, Spiegel Holdings and its affiliates will pay $104 million to all qualified unsecured creditors on a pro rata basis.
The settlement agreement also includes the allowance and specifies the treatment of approximately $200 million of claims held by Spiegel Holdings, Inc. and related parties.
The plan also calls for the formation of a new corporate structure. Spiegel, Inc. will transfer its interest in Eddie Bauer Inc. and its subsidiaries and other affiliated support companies to Eddie Bauer Holdings Inc.
Spiegel Inc. will also transfer its interest in Spiegel Acceptance Corp. and Financial Service Acceptance Corp. to Eddie Bauer Holdings. This company will operate as an independent business, with a separate board of directors from Spiegel, Inc.
Spiegel Inc.’s creditors, with certain exclusions, will initially receive 100% of the equity in Eddie Bauer Holdings. This firm plans to register its common stock with the Securities and Exchange Commission and trade on the NASDAQ exchange.
About a year ago, Spiegel, which had filed for Chapter 11 bankruptcy protection in 2003, requested a three-month extension of its deadline for filing a restructuring plan (Direct Newsline, Feb 4, 2004). At that time, the cataloger and retailer had asked the court for the delay, stating it still needed time to review its holiday results.
In the intervening time, Spiegel sold off its flagship and Newport News catalogs.
Spiegel, which had been financially plagued for a few years already, filed for Chapter 11 bankruptcy protection in 2003. It cited assets of $2.7 billion and liabilities of $1.7 billion.
Network
