Bankrupt clothier Ellen Tracy netting $20 mln for creditors

Broke outfits product Ellen Tracy has obtained $20 thousand for its lenders by deciding a judge action against its former entrepreneurs and loan provider Bore holes Fargo over a 2008 resource purchase from Liz Claiborne.

Wells Fargo will pay $750,000 to the Ellen Tracy property and postpone another approximately $10 thousand in lawful statements, according to agreement documents registered on Wed in U.S. Bankruptcy Court in New you are able to city.

So-called "non-bank" offenders in the judge action will pay $2.75 thousand to the property and postpone $6.5 thousand in statements, the documents display. The non-bank offenders consist of Hilco, one of the financial commitment companies that obtained Ellen Tracy, a former device of style organization Liz Claiborne, in 2008.

The complete value of the agreement to the defunct Ellen Tracy product is about $20 thousand.

"Absent the agreement ... there would be no resources available to pay permitted claims" for lenders, Al Togut, the attorney in cost of liquidating the organization, said in agreement documents.

Togut, of Togut Segal & Segal, had charged Hilco, Bore holes Fargo and others for breaking their fiduciary responsibilities in the purchase and control of Ellen Tracy.

Togut said Hilco made Ellen Tracy financially troubled from the beginning by creating it a co-obliger on $32 thousand in debts that belonged to another enterprise possessed by the same financial commitment team.

The entrepreneurs also provided the privileges to the Ellen Tracy product to an online online enterprise, then released a standard observe when Ellen Tracy could not manage the royals expenses, according to the judge action.

Ellen Tracy "was undercapitalized, but the supervisors were satisfied to keep it that way," Togut said in the judge action. "Their main concentrate was the certification business, and discovering a new licensee for the Ellen Tracy product name, rather than creating (Ellen Tracy) a achievements as an managing organization."

After the bankruptcy had been registered by Ellen Tracy's lenders, the entrepreneurs provided up all of the organization's resources to Bore holes Fargo, despite the point that the organization's receivables were enough to pay off the loan, the judge action claimed.

The agreement still needs judge acceptance. A listening to in bankruptcy judge in New you are able to city is set for Thursday.

Togut dropped to opinion on Friday.

Attorneys for Hilco and Bore holes Fargo could not be achieved for opinion on Friday night.

The bankruptcy is In Re Ellen Tracy LLC, U.S. Bankruptcy Court, Southeast Region of New York, No. 09-14994.

The judge action is Jordan Togut v. Hilco Customer Investment, in the same judge, No. 11-2757.

For Hilco: Gregg Galardi and Jimmy E. Hoeffner, DLA Piper.