This morning’s hearing in U.S. Bankruptcy Court for the Eastern District of Kentucky will not only determine whether last week’s auction results hold, despite a filing by the Cleveland Clinic to oppose Booksellers Enterprises taking over the Joseph-Beth there, but also whether Joseph-Beth Booksellers founder Neil Van Uum will keep one of his stores. According to a filing yesterday, DK Booksellers, LLC, formed by Van Uum, reached an agreement to purchase the assets of the Memphis location from either the Debtors or liquidator Gordon Brothers, which had the prevailing auction bid. The “Davis-Kidd” name and trademarks are not included in the sale; they are part of the transaction with Booksellers Enterprises.
In another twist, the Creditors Committee filed a motion for court approval of a settlement with the Ingram Book Group, which, under the name General Benton Smith, owned a 1% interest in Joseph-Beth. In it, the Committee notes that the prepetition relationship between Joseph-Beth and Ingram has been “a subject of substantial controversy,” including fraudulent conveyances and preferential transfers and breach of fiduciary duties. All of which Ingram disputes.
Under the settlement, which seeks to avoid costly litigation and delays, Ingram will pay $2.5 million in cash to the Debtors’s estates to fund a Chapter 11 plan of liquidation. It will also pay $330,000 for claims asserted by holders of gift cards and gift certificates. It will fund any deficiency owed to prepetition secured lender, Webster Business Credit Corporation, and all postpetition operating liabilities of the Debtors allowable under the Bankruptcy Code. In addition, Ingram waives its right to a distribution based on any asserted prepetition claims against the Debtor’s estates. In exchange, it will receive a general release from any potential claims.
A hearing on the settlement will be held on May 12.
