Law360 (October 21, 2020, 6:02 PM EDT) -- A New Jersey bankruptcy judge said Wednesday that he planned to confirm Sur La Table's Chapter 11 plan, which entails an $89 million assets sale to a private equity venture and would preserve about half its brick-and-mortar footprint.
U.S. Bankruptcy Judge Michael B. Kaplan praised the "extraordinary" work of all counsel during the three months since the upscale kitchenware purveyor arrived in bankruptcy court with a $100 million debt load and stalking horse offer in place.
That stalking horse offer, by Fortress Investment Group, was bested a month later at auction by SLT Lending JV, which also agreed to assume about 50 store leases. Judge Kaplan noted that jobs were saved thanks to the hard work of the counsel involved in the case.
"The work involved in this case was extraordinary," Judge Kaplan said.
The judge also overrode objections by the U.S. Trustee to plan provisions regarding consensual third-party releases and an injunction barring claims against released parties.
The consensual third-party release provision states that creditors are waiving all rights to claims unless they opt out of the release or file an objection. Attorney Lauren Bielskie, representing the U.S. Trustee, said that doesn't give enough consideration to creditors who do neither, rendering the releases essentially nonconsensual.
"It is the U.S. Trustee's position that affirmative consent cannot be inferred from silence," Bielskie told Judge Kaplan, acknowledging that courts are split on the issue.
In support of its request that the injunction provision be removed, the U.S. Trustee said in its objection that confirmations don't serve as injunctions and noted that an automatic stay against claims is already in place and binding to all parties.
Judge Kaplan said he appreciated the objections, but disagreed.
He said he felt proper notice was given regarding the options to opt out of or file objections to the consensual third-party releases and that the injunction language simply clarifies the parties' respective rights.
In the announcement about its July bankruptcy filing, the upscale kitchenware purveyor said the process would result in a revitalized company poised to thrive in the post-COVID-19 environment. The company's insolvency came amid a wave of bankruptcies filed by retailers such as Pier 1 Imports, J.C. Penney, Lord & Taylor, New York & Co.'s parent and Modell's just before or during height of the pandemic-prompted business shutdowns.
Sur La Table operated 121 stores, kitchenware brands and products tailored for cooking preparation and presentation.
The privately held retailer began in Seattle's Pike Place Market in 1972 and was bought by the Behnke family in 1995. In September 2011, alternative investment products provider Investcorp Bank BSC, which is now referred to as simply Investcorp, announced its acquisition of Sur La Table from private equity firm Freeman Spogli & Co. and the Behnke family.
Sur La Table is represented by Michael D. Sirota, Jacob Frumkin and David M. Bass of Cole Schotz PC.
SLT Lending is represented by Sean J. Kirby, Michael T. Driscoll and Justin Bernbrock of Sheppard Mullin Richter & Hampton LLP.
The U.S. Trustee is represented by Lauren Bielskie and Jeffrey M. Sponder.
The case is SLT Holdco Inc., case number is 3:20-bk-18368, in the U.S. Bankruptcy Court for the District of New Jersey.
--Editing by Stephen Berg.
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