Junior creditors say shoe, apparel and accessories seller Nine West Holdings Inc.’s bankruptcy exit strategy is unacceptable, and they need to take over legal claims against private-equity owner Sycamore Partners LP, WSJ Pro Bankruptcy reported. Court papers filed on Tuesday say that Nine West is in talks to settle damage claims against Sycamore on the cheap, allowing the private-equity firm to hang on to what creditors call “a massive financial windfall” it collected as part of an alleged asset-stripping scheme. A Sycamore spokesman yesterday declined comment on the allegations, which surfaced on Tuesday in a filing with the U.S. Bankruptcy Court in New York by the official committee representing Nine West’s unsecured creditors. A spokeswoman for Nine West could not immediately respond to the creditors’ request to pursue a lawsuit that the company has been trying to settle. Read more.
In related news, Nine West Holdings Inc. yesterday filed an amended chapter 11 plan that will reduce its pre-bankruptcy debt obligations by more than $1 billion, Reuters reported. The plan is expected to provide $105 million cash recovery to stakeholders through the settlement of potential claims and causes of action against the company’s indirect equity owners, it said. Nine West, which owns brands such as Anne Klein and Gloria Vanderbilt, said it will also receive a three-year purchase commitment from Belk Inc. for an assortment of merchandise across the company’s businesses. Read more.
