Gordon Brothers Group Wins Auction for ArchBrook Laguna Assets After Two Day Auction

Gordon Brothers Group LLC was announced as the successful bidder for the assets of ArchBrook Laguna Holdings LLC and its affiliates today after a two-day bankruptcy auction.  ArchBrook Laguna Holdings LLC and several affiliated companies - ArchBrook Laguna New York, LLC; ArchBrook Laguna, LLC; ArchBrook Laguna West, LLC; Expert Warehouse, LLC; Lehrhoff ABL, LLC; and Chimerica Global Logistics, LLC - voluntarily filed for chapter 11 bankruptcy protection in New York City in July with the intent of using the bankruptcy to sell their assets.  The companies, which are headquartered in Carlstadt, New Jersey, "operate as a procurement and distribution intermediary between production companies and end retailers using state-of-the-art logistical services."  In court filings, the companies reported over $800 million in revenues in 2010.

According to bankruptcy court filings, ArchBrook Laguna received eight qualified bids for some or all of their assets after beginning the marketing process in May.  After the bankruptcy filing, the companies and their advisors communicated with 31 additional potential bidders and entered into non-disclosure agreements with 29 possible bidders.  Of the eight bids, one was a bid for just the inventory and other assets of Lehrhoff ABL LLC, two bids were for just the companies' accounts receivable, four bids were for just the companies' inventory, and the final bid was a global bid for all of the companies' assets.


Under Gordon Brothers' winning bid, the debtors will receive the following consideration for their assets:

• $25 million in cash subject to certain adjustments and holdbacks;
• 85% of the amount of collection on the accounts receivable greater than $21 million;
• $12.50 per unit of the Ab Circle Inventory; and
• 90% of the proceeds from the sale of the Ab Circle Inventory above $13.50 per unit

The winning Gordon Brothers bid also provides for Gordon Brothers and the debtors to enter into a transition services agreement.  Additionally, the bid provides for the following treatment of the debtors' potential causes of action under chapter 5 of the Bankruptcy Code, according to court filings:

All claims arising under Bankruptcy Code section 547 and related state law causes of action shall be deemed released on the Initial Closing Date by Purchaser.  On the 60th day post-closing, Purchaser shall release all other causes of action arising under Bankruptcy Code sections 544 through 553 (excluding section 547) and similar state law claims; provided however; the Agent, in consultation with the Committee, may request that the Purchaser or Third Party Purchaser, in its sole discretion, re-convey such avoidance actions to Sellers.

For the the inventory and other assets of Lehrhoff ABL LLC exclusively, a $5 million bid made by Almo Corporation was designated as the back-up bid by the debtors.  That bid is required to be held open for a specified period in the event that the winning bid does not close.