Rockport committee says sale would strip estate of litigation claims

By Sarah Lizee

Olympia, Wash., July 19 – Rockport Co., LLC’s proposed sale to stalking horse bidders ABG-Regatta LLC and ABG Intermediate Holdings, units of Authentic Brands Group, drew a limited objection from the official committee of unsecured creditors, according to documents filed Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

The committee said it supports the sale in general but takes issue with the fact that it would strip the estates of potentially valuable litigation claims against the debtors’ lenders, directors, officers, equity owners, affiliates and other parties currently subject to the committee’s investigation.

The group said the “impermissibly broad” definition of “purchased actions” in the sale order includes not only all claims against the debtors’ directors and officers, but also claims against Charlesbank, the debtors’ equity owner and holder of more than $38.6 million in purported secured prepetition Rockport subnotes, and Reef, another Charlesbank portfolio company with which the debtors share certain services and employees through various pre- and post-petition contracts.

“Given the disappointing results of the sale process and the debtors’ overleveraged capital structure, the litigation assets are likely the sole source of recovery for unsecured creditors – who are collectively owed over $70 million – other than those creditors with contracts to be assumed through the sale,” the committee said in the limited objection.

Deal terms

The consideration under the stalking horse agreement includes $40.4 million for intellectual property, $5 million for Rockport Co. Korea Ltd., $100,000 for Calzados Rockport SL, Rockport International Ltd. and Rockport Co., Portugal, Unipessoal, Lda., among other amounts. The final consideration will depend on certain criteria and formulas for valuing inventory.

A sale hearing is scheduled for July 25. The deadline to close the sale is July 28.

Rockport, a West Newton, Mass.-based footwear company, filed its first bankruptcy case on May 14, 2018, and emerged from those proceedings on Dec. 31, 2018. The company filed bankruptcy a second time on June 14 under Chapter 11 case number 23-10774.

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