An employee of Busy Body-owner Fitness Holdings International has proposed to buy all remaining assets of the bankrupt retail business, offering $200,000 in cash.
The buyer, Brandon Sugimoto, has been FHI’s director of financial analysis since May 2005 and, per court documents filed with the U.S. Bankruptcy Court, Central District of California, is considered a financial “insider,” which are those with non-public information about a company from which they can benefit or can affect the company.
Sugimoto, reached by SNEWS® for comment, declined comment on the record about his plans for the assets or the retail business, or an explanation about his interest in it. He is also a principal with a company called Sentinel Development (www.sdevsinc.com), which specializes in distressed developments. He said this proposal to buy FHI assets has nothing to do with the Sentinel business.
In a filing with the court, FHI has filed a motion with the court to allow it to sell its remaining assets to Sugimoto. In that motion, FHI stated it must in this case cease any liquidation sales of current inventory, except those approved by the proposed buyer, and all remaining stores must remain open and operating through the closing date. The filing stated the closing date of the stores is now anticipated to be Aug. 14, 2009. The proposed sale does not automatically include leases; therefore, the buyer, if he plans to continue to operate any stores must negotiate new leases with the landlords, the document stated.
Although Sugimoto is the only bidder for the assets at this time, the case is now open to other bidders. The motion filed July 29, 2009 stated: Any bids must be submitted by Aug. 10 and a hearing is proposed for Aug. 11, 2009, at which time an auction will be held if additional bids are received. Opposition to the motion to sell to Sugimoto must be received by Aug. 5 by FHI’s counsel, SulmeyerKupetz, in Los Angeles, Calif.
Meanwhile, the court on July 30 postponed a hearing to determine if the case should be converted to a Chapter 7 bankruptcy liquidation (from its current Chapter 11 bankruptcy reorganization) per a July 7 request by the unsecured creditors committee, which also requested the postponement on July 21. The hearing date on that matter was changed from July 28 to Sept. 29.
In a brief requesting the postponement, the committee noted based on ongoing negotiations there are viable reasons to keep the case “for the time being” as a Chapter 11 reorganization. “However, conversion may remain appropriate at a future time,” the committee told the court, “and may be necessary with limited notice.”
At the Sept. 29 hearing, the court will also hold a status hearing on the entire case, initially filed Oct. 20, 2008. Click here to see a July 20, 2009, SNEWS story, “Creditors ask court to convert Fitness Holdings bankruptcy to liquidation; meanwhile, store closing sales begin.”