Joan Fabrics asks court for more time to sell equipment

By Reshmi Basu

New York, June 27 - Joan Fabrics Corp. asked for more time to sell equipment at three of its plants in the United States, according to a Wednesday filing with the United States Bankruptcy Court for the District of Delaware.

On Tuesday, Joan Fabrics held an auction to sell substantially all of its assets. However after extensive analysis and consultation, the company said it was not in its best interest to sell the leases of three of its properties, which are located in Cramerton, N.C., Lowell, Mass., and Connelly Springs, N.C.

In addition, it did not make sense to give up the leases because that would require the company to abandon certain assets, such as equipment and inventory, which were also subject to certain liens, Joan Fabrics said.

Such decisions would have resulted in the loss of cash value, according to the court document.

Instead Joan Fabrics has entered into an agreement with relevant parties, which would give it more time to sell the equipment.

The proposed settlement agreement will allow the debtor to potentially capture the upside of the equipment, "without being exposed to potential rent expenses greater than what the debtor will receive for the sale of such equipment."

"In short, the debtors have a potential upside but no downside," according to the filing.

Joan Fabrics, a Tyngsboro, Mass., textile fabric company, filed for bankruptcy on April 10. Its Chapter 11 case number is 07-10479.

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