Mervyns reaches deal for going-out-of-business sales, creditors pull Chapter 7 motion

New York, Oct. 30 - Mervyns said it reached an agreement with its creditors committee and debtor-in-possession lender, resulting the creditors withdrawing their motion to liquidate the company under Chapter 7 and their objection to the company's planned going-out-of-business sales.

The U.S. Bankruptcy Court for the District of Delaware authorized the sales at the company's remaining 149 stores and its planned winding down of the business.

Mervyns said it believes the Chapter 11 process will maximize value for creditors, employees and other stakeholders.

The court also allowed Mervyns to honor accrued vacation to all employees, including those already fired, on full repayment of the DIP facility, which is expected in early December. Under the wind-down budget, accrued vacation will be paid in full.

Great American Group was authorized as agent for the going-out-of-business sales.

Mervyns, a San Francisco-based department store, filed for bankruptcy on July 29 in the U.S. Bankruptcy Court for the District of Delaware. Its Chapter 11 case number is 08-11586.

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