Unsecured creditors unhappy with Cosi Inc.’s auction proposal pushed the flatbread sandwich chain’s lead bidder to increase its offer and won extra time for rival bidders to enter the fray, the Wall Street Journal reported today. Bankruptcy Judge Melvin Hoffman of the U.S. Bankruptcy Court in Boston yesterday said that Cosi could officially put itself up for sale after hearing that hedge fund AB Value Management LLC and Ohio investment firm Milfam LLC will now start the bidding for the casual dining chain at $10 million instead of $6.8 million. They also will take on about $1.6 million in gift-card liabilities, the bidders’ attorney, William Baldiga, said yesterday. The increased stalking-horse offer, as well as a bid deadline that is two weeks later than what Cosi had originally proposed, is the result of negotiations with unsecured creditors who had expressed concerns with the company’s original sale proposal. A federal bankruptcy watchdog also had objected, calling the process “unfair” to rival bidders.
