Bakers Footwear Group Inc. began auctioning off its inventory at 151 of its 214 stores Monday, in accordance with a new financing agreement with Salus Capital Partners that would let the retailer move forward with its reorganization plan.
Last Friday, Salus, an asset-based lender, agreed to loan Bakers $9.5 million for its working capital needs, after the St. Louis-based retailer filed for Chapter 11 bankruptcy last month. The loan is comprised of an $8 million senior secured revolver and a senior secured $1.5 million loan, and is contingent on Bakers’ successful liquidation of 151 stores.
Bakers is simultaneously pleading with the bankruptcy court to approve this new financing commitment as early as Wednesday. Salus must close the funding agreement no later than Nov. 16 or Bakers will be forced to liquidate the inventory at the remaining 63 stores.
In court documents filed Monday, Bakers’ lawyers said the expedited hearing “is critical to [Bakers’] effort … to support a plan of reorganization.”
Bakers’ plan, however, has hit consistent road bumps. Court documents from late October show various landlords submitting written objections to the retailer holding liquidation sales at malls.
It is still unclear what will happen to Bakers’ leases. Last month, Aldo U.S. Inc. notified Bakers it was seeking to “immediately terminate” an August agreement to assume leases for up to 52 stores for $6.38 million in cash, according to an SEC filing.
Bakers said it “intends to vigorously defend its position in court, including potentially seeking recovery from Aldo for breach of contract.”