Attorneys for Montgomery Ward & Co. spent Monday haggling over terms of the retailer’s credit card agreement with General Electric Capital Corp., its largest shareholder and only secured creditor. At issue is whether Wards or GE Capital should bear a larger share of credit losses while Wards undergoes Chapter 11 bankruptcy reorganization.
GE Capital acquired Wards’ private-label credit card portfolio as part of the 1988 leveraged buyout of the Chicago-based retailer. Since 1991, GE Capital and Wards have shared the cost of writeoffs in the Wards portfolio. By year-end 1996, Wards owed GE Capital $333 million for its share of unpaid credit losses.
Wards confirmed that negotiations are taking place over the credit card agreement but declined to comment on specifics. The discussions, which include Wards unsecured creditors, are being conducted in closed sessions of the U.S. Bankruptcy Court in Wilmington, Del.
Separately, Wards chief executive Roger Goddu said the company met its December sales plan and “had a substantial improvement in gross margin.” Wards said it racked up double-digit sales increases in several businesses and that apparel sales were “very strong.”
