Happy Kids gets court OK for $23 million rights and trade name assets sale bid procedures

By Caroline Salls

Pittsburgh, Oct. 20 - Happy Kids, Inc. obtained approval of the bidding procedures and its choice of Wear Me Apparel Corp. as the stalking-horse bidder for its proposed $23 million sale of rights and trade name assets assigned to Happy Kids by several private label apparel companies, according to a Thursday filing with the U.S. Bankruptcy Court for the Southern District of New York.

An auction will be held Nov. 17, with the sale hearing scheduled for Nov. 18.

The assets to be acquired will include:

* All titles, rights, trade names and licenses granted by Calvin Klein Jeanswear Co. and CKJ Holdings Inc.;

* All titles, rights, trade names and licenses granted by Calvin Klein Jeanswear Co. and CKJ Holdings Inc., as licensor and Warnaco Inc. as underwear licensor;

* All titles, rights, trade names and licenses granted by Phillips-Van Heusen Corp. under its children's wear license agreement and children's outerwear license agreement; and

* All titles rights, trade names and licenses granted by The Basketball Marketing Co., Inc., which does business as AND 1.

The assets also include $1.4 million in cash, which is the value of employee receivables under split-dollar life insurance policies.

If Wear Me Apparel is not the high bidder, Happy Kids will be required to pay a $1 million break-up fee and $200,000 expense reimbursement.

Bids other than Wear Me Apparel's must include a $1.5 million consideration for the break-up fee, expense reimbursement and the first bidding increment of $300,000.

Each successive bid must be for at least $200,000 more than the previous bid.

Bids other than Wear Me Apparel's must also include a $1.5 million deposit.

Happy Kids is a New York-based designer and marketer of children's apparel. Declining sales and years of over leveraged finances led Happy Kids to file for bankruptcy on Jan. 4, 2005. Its Chapter 11 case number is 05-10016.

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