Big M seeks court approval of settlement to save going-concern sale

By Caroline Salls

Pittsburgh, May 16 - Big M, Inc. requested court approval of a settlement with April Vreeland Associates, LLC, M.C.P. Associates, LP and members of the Mandelbaum family that will allow the company to move forward with the proposed going-concern sale of substantially all of its assets, according to a May 16 filing with the U.S. Bankruptcy Court for the District of New Jersey.

Big M said the settlement will also allow it to fully resolve claims between the parties through the payment of $800,000 to the company's estate without the need for risky, expensive and time-consuming litigation, and will reduce the pool of general unsecured claims filed against it.

Absent approval of the settlement, Big M said it would be unable to satisfy some conditions to closing contained in its stalking horse agreement and a related stipulation.

According to the motion, the stalking horse bidder terminated its commitment after the court declined to approve the stalking horse protections.

"Quite simply, and given that no other bids were submitted, there would be no going concern sale of the debtor's assets if MCP, the Mandelbaum family and the Mandelbaum guarantors had not stepped up and provided the various lease concessions and financial assurances required to get the stalking horse agreement back on track," the company said in the motion.

To ensure that the sale goes forward as planned and to avoid a debtor-in-possession financing default, Big M said it agreed to release MCP, the Mandelbaum family, the Mandelbaum guarantors and April Vreeland from specified claims.

Settlement terms

Under the proposed settlement:

• MCP will provide substantial lease-related concessions sought by the stalking horse bidder, including more than $6.2 million in rent concessions;

• MCP will reduce its lease cure claim to $590,000;

• Alan Mandelbaum, Ken M. Mandelbaum and Michael Mandelbaum entered into a backstop guaranty in favor of stalking horse bidder YM Inc. USA under which they will guaranteed the payment of stalking horse protections and payment of the bidder's legal fees incurred from April 19 through May 2;

• Some members of the Mandelbaum family agreed to release their deferred compensation entitlement claims against the company; and

• The non-debtor released parties agreed to pay $800,000 to Big M in resolution of any claims the company may have against them.

Big M, a Totowa, N.J.-based women's clothing chain owner, filed for bankruptcy on Jan. 7. Its Chapter 11 case number is 13-10233.

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