S&K Famous Brands Inc. likely will be auctioned off today to a company that will liquidate its merchandise and close its remaining 105 stores.
In a court papers filed yesterday afternoon, the Henrico County-based menswear retailer said it would hold an auction at the Richmond office of its attorneys starting at 1 p.m.
The two bidders are Hilco Merchant Resources LLC and Gordon Brothers Retail Partners. Hilco was named the stalking-horse bidder at a hearing last week in U.S. Bankruptcy Court in Richmond, where S&K filed for Chapter 11 protection in February. For being a stalking-horse bidder, Hilco guaranteed S&K $7.9 million for selling off its merchandise and fixtures at going-out-of-business sales.
However, an option in the agreement gives Hilco a choice to keep running some of the retailer’s operations.
Hilco was to notify S&K by last Friday if it planned to exercise that option, but no paperwork has been filed with the bankruptcy court indicating it would do so. It was unclear whether Gordon Brothers has a similar provision as part of its bid. Hilco and Gordon Brothers are known for buying distressed companies and selling off merchandise.
The two companies worked together last year selling off merchandise at 154 Circuit City stores that were being closed. They also have worked together on the liquidation of Mervyn’s department stores and of home décor retailer The Bombay Co.
If the sale is approved at a hearing tomorrow, it will become the second Henrico-based retailer to shut down this year. Circuit City closed its last stores in March.
Exacerbating S&K’s cash position, and hurting its ability to make sales that would raise money, is the fact that inventory at its remaining stores is running thin, the restructuring officer said.
From the Times Dispatch Article by Louis Llovo.