Rhodes obtains court OK for bidding procedures to select merchandise liquidating agent

By Caroline Salls

Pittsburgh, July 19 - Rhodes, Inc. obtained court approval of the bidding procedures for an auction to select a merchandise liquidating agent in connection with its proposed store closing sales and approval of a $300,000 break-up fee to be paid to the selected agent, according to a Tuesday filing with the U.S. Bankruptcy Court for the Northern District of Georgia.

In addition to the break-up fee, the agent will be granted limited overbid protection by requiring that any competing bids provide for at least the break-up fee plus 0.5%.

Also, each subsequent bid will be required to be at least 0.5% over the preceding bid.

Following the auction, Rhodes will enter into an agreement with the agent selected as the highest bidder, conduct the store closing sales and cease operations at the locations to be closed.

Under the proposed agent agreement, the agent will be obligated to pay to Rhodes 80% of the value of the merchandise located in the closing locations plus the greater of 1% of the proceeds generated by the sale of the merchandise sales plus 2% of the net proceeds of the sale of the additional merchandise or $400,000.

The auction will be held July 22. A hearing on the sales and agency agreement will be held on July 26.

Rhodes, an Atlanta-based furniture retailer, filed for bankruptcy on Nov. 4, 2004. Its Chapter 11 case number is 04-78434.

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