A key court hearing will be held this morning in the DVS bankruptcy case.
Sequential Brands Group, owner of the William Rast brand, made a $7 million winning bid for DVS after an auction that included dozens of rounds of active bidding and that lasted from 10 a.m. to 5 p.m. Monday, according to court documents.
(Read our profile of Sequential for more information about the company.)
However, the Creditors' Committee says an additional bidder has emerged who is prepared to pay more, which would allow other DVS creditors to be paid in addition to DVS’s main creditor, Bank of America.
With the current $7 million bid, many creditors will receive nothing, according to the Creditors' Committee.
The Creditor’s Committee has asked that the hearing set for this morning be rescheduled for Monday so this new bid can be evaluated.
Attorneys for Sequential Brands Group filed documents objecting to this continuance, saying allowing in an additional bidder at this point subverts the bankruptcy auction process.
Sequential believes this “additional” bidder was at the auction, and that its bid was announced as the initial one. After an early round of bidding, this bidder never bid again, even after the final bid was called three times, Sequential claims in court documents.
The company also points out in court documents that DVS has said it will run out of cash on June 22, and the delay in closing the transaction will be detrimental to DVS, especially since the management team has tried to complete the auction while maintaining customer confidence.
Sequential also worked on June 19 at DVS offices, and has begun talking with DVS employees. Some of the Sequential team is also in route to Los Angeles, China and Ireland to close the deal, according to court documents.
“It is fundamentally unfair to hold the successful bidder hostage while the committee pursues a losing bidder’s interest,” Sequential attorneys wrote in court documents.