Rosy Blue Objects to Sears Sell-Off Plan

RAPAPORT... Rosy Blue and Vijay Gold Designs have challenged SearsHoldings Corp.'s store-liquidation plans, claiming that some of the assets itwants to sell off are consignment goods.Sears filed for Chapter 11 bankruptcy protection earlierthis month, saying it would close 142 stores and sell off their inventories.However, those proposals do not protect suppliers that have consigned productsto the retailer, Rosy Blue and Vijay Gold - the trading name for ShantiCorporation - claimed in separate court filings Monday."In the store-closing motion, the debtors seek authorityto, among other things, liquidate all of the inventory at the closing stores,whether they own it or not," Rosy Blue said in its "limited" objection. "Thestore-closing motion fails to address the inventory belonging to Rosy Blue orother consignors, and fails to provide for any adequate protection to Rosy Blueor other consignors in connection with the store-closing sales."Credit memoranda - or memos - enable jewelers to obtaingoods from suppliers without the inventory cost, and pay for them when theymake a sale. Both vendors entered such agreements with Sears in September 2013to supply jewelry products to the now-bankrupt retailer, according to thedocuments. They subsequently filed a legal statement that ensured the jewelry would not be mislabeled as Sears' assets in the case of bankruptcy - known in technical terms as "perfecting the security interests."  In their arguments, Rosy Blue and Vijay Gold cited the2008 bankruptcy of Whitehall Jewelers Holdings, in which a court ruled that itcould only sell consigned goods if it had the supplier's consent or provided itwith adequate protection.Sears' attorney declined to comment, as did Rosy Blue. VijayGold's attorney was not available for comment at press time.Image: A Sears store. (Andriy Blokhin/Shutterstock)