Gander Mountain U.S. trustee recommends against OK of adviser hiring

By Caroline Salls

Pittsburgh, March 17 – The U.S. trustee overseeing Gander Mountain Co.’s Chapter 11 bankruptcy case recommended that the U.S. Bankruptcy Court for the District of Minnesota deny a company request to hire Hilco Real Estate, LLC as its real estate adviser, according to a report filed Friday.

Region 12 U.S. Trustee Daniel McDermott said Gander Mountain’s application states that a company sharing the same parent as Hilco, LLC may submit a stalking horse bid for its assets, but that there will be an ethical wall between the two companies and that the companies do not share employees or office space.

“The U.S. trustee cannot determine whether a conflict of interest exists that causes Hilco not to be disinterested,” McDermott said.

“If Hilco is negotiating leases that will be subject to the stalking horse’s purchase, there is a potential conflict because a favorable lease deal to the purchaser would result in a larger deficiency claim against the debtor. “In addition, while the companies may be separated by an ethical wall, both companies are subject to the same parent that would presumably want to maximize its interests.”

McDermott said the application does not include enough facts to determine whether the services to be provided by Hilco include the assets to be sold to the stalking horse bidder or what services Hilco will be providing for the leases to be assigned to the purchaser.

The U.S. trustee said he has asked Gander Mountain’s counsel for more information.

Gander is a Saint Paul, Minn.-based retail network of stores for hunting, fishing, boating, camping, marine and outdoor lifestyle products and services. The company filed bankruptcy on March 10 under Chapter 11 case number 17-30673.

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