Brooks Brothers Group ABL agent objects to stalking horse agreement

By Caroline Salls

Pittsburgh, July 30 – Brooks Brothers Group, Inc. administrative agent Wells Fargo Bank, NA objected Wednesday to the company’s proposed asset sale procedures, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

“The baseline bid submitted by the stalking horse bidder includes unnecessary and excessive bid protections in excess of $10 million, none of which are required to induce the stalking horse bidder to submit its bid, but all of which must be paid in cash by any competing bidder,” the objection said.

As an oversecured creditor, the ABL agent said it does not oppose a sale of Brook Brothers’ assets, including the ABL collateral, through a fair and robust sale process that maximizes value for the company’s estates and their creditors. However, Wells Fargo said the proposed bid procedures and stalking horse agreement will not accomplish that goal.

Specifically, the agent said the stalking horse agreement “ascribes an arbitrary target inventory purchase price for the inventory in the amount of $225,000,000 multiplied by a factor of 0.75, resulting in an attributed value of $168,750,000 for the purchase of the inventory.”

Wells Fargo said that attribution of value does not appear to be supported by any analysis of the value of the inventory that comprises the bulk of the ABL collateral, and does not have the support of the ABL agent.

According to the objection, the latest appraisal received by Wells Fargo shows that the net orderly liquidation value of the inventory averaged in excess of 115% of the cost of that inventory, which far exceeds the proposed purchase price in the stalking horse agreement.

Brooks Brothers is an apparel retailer based in New York City. The company filed bankruptcy on July 8 under Chapter 11 case number 20-11785.

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