The bankruptcy court overseeing the Chapter 11 proceedings of Syms Corp. confirmed the company’s reorganization plan, Syms announced yesterday. A confirmation hearing, which began Aug. 29, concluded on Aug. 30, according to court filings, with the bankruptcy court in Wilmington, Del., overruling several objections.

As reported, the company’s plan would create a new company that would dispose of Syms’ real-estate assets over time. Marcy Syms, the current majority shareholder, would sell her shares in their entirety to the newly constituted Syms at a price of $2.49 per share. Meanwhile, Syms would offer to sell to existing accredited shareholders – other than Marcy Syms – the right to purchase a total of more than 10 million new shares at a price equal to $2.49 per share, or roughly $25 million in the aggregate. Equity committee members DS Advisors, Esopus Creek Value Series Fund, and Marcato Capital Management have agreed to backstop the offering.

Proceeds from the rights offering, along with proceeds from real-estate dispositions, would be used first for payment of exit and other costs, with any remaining proceeds to be split between creditors and Marcy Syms, with creditors receiving 60% and Marcy Syms receiving 40%, until she is paid about $10.73 million. The balance, which would be due to Marcy Syms – another roughly $7.1 million – is slated to be paid after a reorganized Syms has satisfied all its obligations to creditors under the plan.

Under the proposed plan, Syms creditors would be paid in full.

Creditors of Syms unit Filene’s Basement, meanwhile, who contend they hold potential claims against Syms that, if successful, would pay them in full, would be governed by a compromise under which claimholders would share in a portion of the proceeds of Syms’ assets on a delayed basis, such that trade creditors and employees could ultimately be paid in full and holders of lease rejection claims could be paid at 75%, over time. Alternatively, Filene’s creditors would have the option of accepting distributions from Filene’s assets alone, which would give them a recovery of 0-2%, while preserving any claims they may have against Syms.

According to a company announcement, upon emergence from Chapter 11 the reorganized Syms’ new board of directors is to be comprised of three directors appointed by the equity committee, one director appointed by the creditors’ committee, and one independent director mutually chosen by both committees.

As reported, Syms filed for Chapter 11 on Nov. 2, 2011, after a five-month sales process failed to turn up any buyers, saying it intended to liquidate all of its assets. As of Dec. 31, 2011, the company terminated all of its retail operations, leaving only its real estate intact.

In February, however, the equity panel in the case sought to terminate the company’s exclusive right to file a reorganization plan in order to file a plan of its own. Ultimately, the panel agreed to return to the bargaining table, and while negotiations were bumpy over the next several months, on July 12 the company filed a proposed reorganization plan with the support of both the creditors’ and equity holders’ committees.

The bankruptcy court in Wilmington, Del., approved the company’s disclosure statement on July 13. –Alan Zimmerman

Patriot Coal defended its decision to file its Chapter 11 case in bankruptcy court in Manhattan, saying that in light of the worldwide scope of its business, “the Southern District of New York provides an overwhelmingly more convenient and cost-effective forum.”

As reported, last month the United Mine Workers, a union representing some 40% of the company’s employees, filed a motion to transfer venue in the case to Charleston, West Virginia, arguing that most of the company’s business and employees are located there, and because West Virginia has a much more significant interest in the company’s reorganization than New York (see “Patriot Coal union says Ch. 11 should be moved to West Virginia,” LCD, July 19, 2012).

“No one mines coal in New York,” the union said in its motion.

The U.S. Trustee for the New York bankruptcy court also filed a motion late last week arguing that venue should be transferred from the jurisdiction, on the grounds that the company’s creation of two New York subsidiaries shortly before its filing, ostensibly for the sole purpose of establishing venue in the state, was improper. Unlike the UMW, however, the U.S. Trustee did not urge a transfer to any other specific court.

In its Aug. 27 response to both motions, the company conceded that the lion’s share of its mining operations and employees are located in West Virginia, but the company argued that those facts do not necessarily mean that West Virginia is a better forum in which to adjudicate its bankruptcy. Patriot Coal noted, for example, that its headquarters and administrative offices were located in St. Louis, and that 95% of the company’s coal is supplied to customers outside of West Virginia.

“The debtors’ creditors, like their businesses, are also spread out throughout the United States and abroad,” the company said. “A transfer to West Virginia would be more convenient for very few creditors, most of whom will play little or no active role in the court proceedings, and would impose enormous costs and administrative strains on these cases.”

The company argued that in a “complex case such as this, which involves operations, financial interests, and creditors across the United States and around the world, the tremendous efficiencies that are gained by proceeding in New York City, a global transportation hub, [would] be lost in favor of proceeding in West Virginia, where the transportation and other logistical options are vastly more restrictive and costly.”

The company also notes, “Notably, many of the debtors’ contracts are governed by New York and not West Virginia law, including virtually all of the debtors’ pre-petition debt instruments [and] almost two-thirds of their sales contracts.”

Indeed, the company argued, these factors made New York the location of choice for many large corporate bankruptcies, even when “their headquarters and assets are primarily located outside the jurisdiction,” specifically citing the Chapter 11 cases of Lyondell Chemical, Boston Generating, General Motors,Chrysler, and Northwest Airlines.

“A principal reason why venue in those cases was appropriate – and why it is appropriate here for the efficient administration of the estate,” the company argued, “is that experience has shown that the most frequent attendees at court hearings – by far – are the debtors’ professionals, the lenders’ professionals, and other material counterparties and their professionals, almost all of whom are located in New York in this case.”

The company acknowledges that there are other creditors and stakeholders in the case outside of New York, but even for these creditors New York would be a more convenient place for them to attend hearings than West Virginia, Patriot Coal argues.

As for the company’s employees and retirees in West Virginia, Patriot Coal said the union “overstates the importance of the location of employees and retirees,” arguing, “It is not expected that more than a handful of employees or retirees would ever need to be present in this court,” and, “To the extent that union members – or any interested individuals – wish to monitor the proceedings, well-established technology will allow them easily and conveniently to do so.”

In addition to the company and the creditors’ panel, objections to changing venue were filed by several of the company’s creditors, as well as the company’s DIP lenders.

A hearing on whether to transfer venue is scheduled for Sept. 11. – Alan Zimmerman