Creditors` hopes for breathing new life into Wieboldt Stores Inc. hang by a thread as they await Monday`s court decision on how much of the retailer`s inventory will be returned to its leading vendor.
Skokie-based M.L. Rothschild & Co., which shipped $6.8 million in merchandise to Wieboldts under a credit agreement, last week won a temporary restraining order allowing it to take its goods out of Wieboldts` remaining 12 stores.
But Rothschild attorneys contend that their client is entitled to all inventory, which was pledged as collateral in the credit agreement, not just the $6.8 million in merchandise. Wieboldts` attorneys vigorously dispute that claim.
A decision will be made Monday by Cook County Circuit Judge Arthur Dunne. Meanwhile, creditors are faced with the prospect that whatever Dunne decides could force Wieboldts to drastically curtail its operations, at least temporarily.
Hearings on the case itself–where Rothschild will claim its credit agreements entitle it to all Wieboldts` inventory and leases on three stores and Wieboldts will claim that the previous management`s agreement was fraudulent–begin September 29 in Dunne`s courtroom.
”The Rothschild case is, quite simply, an attempt on (their) part to liquidate our merchandise in our stores and put us out of business,” New York investor Alan Cohen, who purchased an option to buy Wieboldts stock last month, said in a letter sent to the chain`s employees Friday.
Rothschild and its partner, Consoldiated Stores Corp., a Columbus, Ohio, liquidator that bought a 75 percent stake in the credit agreement, filed the suit only to ensure that they could be Wieboldts` liquidators, says Wieboldts. On the other hand, Rothschild contends that Cohen, whose firm also handles liquidations, will stock the stores only through Christmas–and then liquidate them himself.
In the letter to employees, Cohen said ”$30 million-plus in new inventory” is on its way to the stores, with ”a selection far superior to what Rothschild was able to provide.” Some of that merchandise, principally menswear, is already trickling into the stores, according to a spokesman for Wieboldts.
Whether enough new merchandise makes it into Wieboldts to replace the inventory that Rothschild attorney John D. Lien, of Antonow & Fink in Chicago, says his client is ”ready to pull out Monday night” is a key question.
At a meeting of the company`s 50 largest creditors last week in New York, Cohen asked for, and apparently received, a 90-day moratorium on some $20 million in debt payments while the company tries to work out a new business plan.
But Lien told the court later that week that Wieboldts–which admitted having $72 million in liabilities, including about $7 million in back taxes and pension payments, and only $68.2 million in assets–had received a lease termination notice on its Harlem-Irving store.
Lien said Wieboldts ”was about” to receive similar notices on its Ford City and Randhurst stores for nonpayment of rent.
