Ultimate Electronics plans April 7 for auction date to select store closing agent

By Ted A. Knutson

Washington, March 18 - Ultimate Electronics, Inc. intends to hold an auction on April 7 to select a seller to dispose of inventory in stores it plans to close, according to proposed bidding guidelines filed Thursday with U.S. Bankruptcy Court for the District of Delaware.

If objections are made, a hearing to approve the procedures is scheduled for March 24.

Under the proposed guidelines, prospective bidders would have to register by April 4 and pay a good faith deposit of $1 million.

If there is more than one qualified bidder, an auction will be held at 11 a.m. ET on April 7 at the offices of Skadden, Arps, Slate, Meagher & Flom in Wilmington, Del.

Ultimate asked for a hearing to approve the winning bidder and the store closings on April 8.

As part of the bidding process, Ultimate is seeking authority to name a stalking horse bidder. If the stalking horse bidder does not win the auction, that bidder would be entitled to a termination fee under the plan of $150,000 or 2% of the transaction's value, whichever is less.

Ultimate currently operates 65 stores but is looking to shutter underperforming or unprofitable stores plus outlets in markets where it no longer intends to operate.

In the Thursday court filing, Ultimate noted on March 15 it a delivered preliminary business plan to Wells Fargo Retail Finance, the agent for its DIP lenders. However, the agent rejected the business plan, claiming that Ultimate did not show it had enough liquidity to fund the business.

On March 16, Ultimate and Wells Fargo Retail Finance agreed to a waiver that allows the retailer until March 23 to come up with final business plan including proposed store closings.

Ultimate, a Thornton, Colo.-based consumer electronic retailer, filed for Chapter 11 on Jan. 11. Its case number is 05-10104.

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