Less than a month after it filed for bankruptcy protection and said it was considering a possible sale of the company, Lillian Vernon has found a suitor: Creative Catalogs Corp.
Lillan Vernon’s president/CEO Michael Muoio confirmed published reports that the company has reached a tentative agreement to sell itself to Lemont, IL-based Creative Catalogs Corp. for $9.3 million.
However, there may be other bids. On Friday, a judge in the US Bankruptcy Court in Wilmington, DE, approved Lillian Vernon’s plans to hold an auction to sell itself. All bids are due by March 31 and the auction will be held on April 1, said Muoio.
“There has been a lot of interest,” Muoio said, adding that he expects other bids.
Lillian Vernon continues to operate online via debtor financing but isn’t currently mailing any catalogs, Muoio said.
The court also approved an order authorizing Lillian Vernon to hire a liquidator to hold going-out-of-business sales.
Lillian Vernon filed for Chapter 11 protection on February 19 along with several other entities including Lillian Vernon International Inc., LV Catalog Holding Corp., LVC Retail Corp., Everyday Celebrations Inc. and Rue de France Inc.
The step followed a series of step backs for the company, including a series of staff reductions and other cutbacks and reductions in its catalog circulation.
When Sun Capital acquired Lillian Vernon in 2006, the company’s losses were around $22 million, said Muoio, in an earlier interview. Merchandising, overhead and other issues were resolved during the following year, reducing losses to $3.9 million. However, increasing paper, postage and freight costs made it impossible for Lillian Vernon to entirely bounce back from its earlier problems.
“The cost increases were impossible to overcome,” Muoio said. The current economic situation hasn’t helped, either.
Once Sun Capital said it wouldn’t fund Lillian Vernon going forward, the rest was pretty much a foregone conclusion.
