Iron Age to sell assets in bankruptcy; granted interim approval of $23.6 million DIP facility

By Caroline Salls

Pittsburgh, Jan. 26 - Iron Age Corp. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Massachusetts and has requested court approval to sell some of its assets.

The company has obtained interim court approval of a $23.6 million debtor-in-possession facility.

Iron Age has also received court approval of the bidding procedures for the sale, including payment of a break-up fee of 3% of the proposed initial purchase price.

In addition, the bid procedures provide that initial overbids must be for the greater of 1% of a stalking horse bidder's proposed purchase price or $100,000 in excess of the proposed purchase price.

If the company decides to sell its assets through a going concern sale, the auction will be held on Feb. 9 and the successful bidder must close on the sale by Feb. 28.

If the company decides to conduct a going-out-of-business sale, the auction will be held Feb. 9 and the successful bidder will start the liquidation sale on Feb. 10.

In connection with the bankruptcy filing, the company requested court approval of a $23.6 million DIP facility from GMAC Commercial Finance LLC.

According to court documents, proceeds from the DIP facility will be used to fund expenses reflected in a budget through advances of amounts applied to pre-bankruptcy debt and new advances.

Interest will be Prime rate plus 200 basis points.

Iron Age obtained interim court approval of the DIP facility, which the order said will terminate on the earliest of Feb. 9 if a final order has not been entered, March 15 or upon occurrence of an event of default.

A second interim DIP hearing will be held Feb. 1, and the final DIP hearing is scheduled for Feb. 9.

Iron Age's largest unsecured creditors include The Timberland Co., Chicago, with a $2.43 million claim and Soleill Inc., Korea, with a $1.21 million claim.

Iron Age, a Westborough, Mass., retailer and distributor of safety, work and uniform shoes for the industrial, service and government sectors, filed for bankruptcy Jan. 22. Its Chapter 11 case number is 07-40217.

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