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Court approves auction of Fortunoff's assets

By Michelle Graff
February 10, 2009

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An auction of Fortunoff's assets will take place on Feb. 23,
encompassing all of the retailer's assets, except for "goods provided to the debtors on consignment as set forth in the agency agreement," court documents state.

New York--A bankruptcy court judge has approved bankrupt retailer Fortunoff Fine Jewelry and Silverware LLC's request to auction off its assets, excluding goods obtained on memo, later this month, court papers show.

According to documents filed on Monday in the U.S. Bankruptcy Court for the Southern District of New York, the auction will take place at the offices of law firm Sidley Austin LLP, 787 Seventh Ave. in Manhattan, at 10:00 a.m. on Feb. 23.

The sale will encompass all of the Westbury, N.Y.-based fine-jewelry and furniture retailer's assets, "but will specifically exclude goods provided to the debtors on consignment as set forth in the agency agreement," court documents state.

Any person or entity that wants a chance to bid on Fortunoff's assets must submit a qualified bid in writing to the offices of Sidley Austin LLP on or before Feb. 19 at 4:00 p.m. and follow all bidding procedures to attend the auction, court papers state.

Anyone interested in obtaining a copy of the sale motion and details on the bidding procedures can choose one of the following options: contact the law firm of Sidley Austin; view the information on the bankruptcy court's Web site, NYSB.USCourts.gov; view the documents in person at U.S. Bankruptcy Court for the Southern District of New York in Manhattan; or visit the case Web site, Fortunoff-Reorg.com.

Any objections to the sale of Fortunoff's assets must be put in writing and received by Fortunoff and its attorneys, Sidley Austin, by Feb. 20 at 4:00 p.m.

Following the auction, a sale-approval hearing is scheduled for Feb. 24 in the U.S. Bankruptcy Court in Manhattan, according to court documents.

Fortunoff filed for Chapter 11 bankruptcy protection last week, citing a severe liquidity crisis, poor holiday season and weak consumer spending--the fallout from the global financial crisis that is impacting retailers worldwide.

Fortunoff President and CEO Charles Chinni said the company was actively seeking a buyer and would continue to do so as part of the Chapter 11 process.

According to court documents, while in Chapter 11, Fortunoff wants "to continue to operate their business" as it looks to sell its assets, either in whole or in parts, as a going concern. However, "if such a transaction is not possible," court documents state, Fortunoff will "wind down the business through an orderly liquidation and going-out-of-business sales," court papers state.

Fortunoff first filed for bankruptcy in February 2008 but seemingly was rescued when private equity firm NRDC Equity Partners, which owns Lord and Taylor department stores, purchased the company.

The purchase plan called for NRDC to pump money into freestanding Fortunoff stores and incorporate Fortunoff's jewelry and bridal registry into Lord and Taylor.

The plan apparently never got off the ground as Fortunoff floundered through a difficult 2008, incurring losses of $42.2 million on revenues of about $260 million between March 3-Nov. 30, 2008, according to court documents.

The company currently operates a total of 20 stores in New York, New Jersey, Connecticut and Pennsylvania, but recently closed its flagship store on 57th Street in Manhattan.

The Fortunoff brand dates back to 1922, when it was started by the Fortunoff family, who sold the majority of their stake in the business in 2005.
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