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Rosy Blue Objects to Sears Sell-Off Plan
Oct 24, 2018 10:06 AM
By Rapaport News
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RAPAPORT... Rosy Blue and Vijay Gold Designs have challenged Sears
Holdings Corp.’s store-liquidation plans, claiming that some of the assets it
wants to sell off are consignment goods.
Sears filed for Chapter 11 bankruptcy protection earlier
this month, saying it would close 142 stores and sell off their inventories.
However, those proposals do not protect suppliers that have consigned products
to the retailer, Rosy Blue and Vijay Gold — the trading name for Shanti
Corporation — claimed in separate court filings Monday.
“In the store-closing motion, the debtors seek authority
to, among other things, liquidate all of the inventory at the closing stores,
whether they own it or not,” Rosy Blue said in its “limited” objection. “The
store-closing motion fails to address the inventory belonging to Rosy Blue or
other consignors, and fails to provide for any adequate protection to Rosy Blue
or other consignors in connection with the store-closing sales.”
Credit memoranda — or memos — enable jewelers to obtain
goods from suppliers without the inventory cost, and pay for them when they
make a sale. Both vendors entered such agreements with Sears in September 2013
to supply jewelry products to the now-bankrupt retailer, according to the
documents. They subsequently filed a legal statement that ensured the jewelry would not be mislabeled as Sears’ assets in the case of bankruptcy — known in technical terms as “perfecting the security interests.”
In their arguments, Rosy Blue and Vijay Gold cited the
2008 bankruptcy of Whitehall Jewelers Holdings, in which a court ruled that it
could only sell consigned goods if it had the supplier’s consent or provided it
with adequate protection.
Sears’ attorney declined to comment, as did Rosy Blue. Vijay
Gold’s attorney was not available for comment at press time.
Image: A Sears store. (Andriy Blokhin/Shutterstock)
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Tags:
bankruptcy, chapter 11, consigned goods, consignment, Credit memoranda, liquidation, memo, memos, Rapaport News, rosy blue, sears, Sears Holdings Corp., Shanti Corporation, UCC, Uniform Commercial Code, Vijay Gold Designs, Whitehall Jewelers Holdings
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