Dubai unit restructuring plan awaits creditors' nod
Wilmington (US), January 8, 2011
Loehmann's, a US-based designer brand owned by Dubai World unit Istithmar, has received bankruptcy court approval to put its restructuring plan to a vote of creditors, a key step to ending the department store chain's Chapter 11.
Creditors of the company will have until February 2 to vote on the plan, the company said on Wednesday. A bankruptcy court hearing is scheduled for February 7 to confirm the plan.
Loehmann's reached agreement last month with the official committee of unsecured creditors on a plan that would bring the company out of bankruptcy by mid-February.
As part of the plan, Istithmar, and Whippoorwill Associates will backstop a rights offering that will invest $25 million in the company when it exits Chapter 11.
The pair will likely end up owning 71 to 85 per cent of the company when it exits Chapter 11, depending on the outcome of the rights offering.
Loehmann's, which opened in Brooklyn in 1921, sells designer brands at steep discounts through its stores. It has been unable to meet its debt load even as competitors such as TJX Cos and Ross Stores have reported robust sales.
Loehmann's has been closing its weaker locations and currently has about 46 stores.-Reuters