Lillian Vernon close to a sale

Lillian Vernon Corp., which filed for Chapter 11 bankruptcy protection on Feb. 20, has reached a tentative agreement to sell the company, according to documents filed in March in U.S. Bankruptcy Court in Wilmington, DE.

Court documents say the 57-year-old gifts and housewares cataloger’s $9.3 million base purchase price could be adjusted based on inventory and the value of other property. The Virginia Beach, VA-based company listed its inventory with a book value of at least $21.1 million in court documents.

The potential buyer is Personal Creations.com, a Lemont, IL-based cataloger, which like Lillian Vernon specializes in personalized gifts. Personal Creations.com is owned by Creative Catalog Holding Corp. Court documents label Creative Catalog Holding Corp. as the “stalking horse bidder.”

Lillian Vernon CEO Michael D. Muoio declined to comment, but Lillian Vernon officials plan to ask a judge for permission to hold an auction to gauge buying interest in the company.

Those bids are due March 31 and the auction is scheduled for April 1 at a Wilmington law firm. Any sale agreement requires approval from the bankruptcy court on April 3. Lillian Vernon officials believe a quick sale is the best way to raise money to pay off debts. “The debtors have nearly exhausted their cash resources and do not have additional investors willing to invest additional funds,” court documents say.

Lillian Vernon, which has been owned by Sun Capital Partners since May 2006, said in its bankruptcy filing its 30 largest unsecured creditors are owed $11.6 million. It also said it owes about $15.5 million to secured lender Wachovia Bank, and roughly $7.5 million to investors.

Chris Shannon, managing director for New York-based investment bank Berkery, Noyes & Co., says Personal Creations.com is “part of a larger catalog conglomerate that has always operated well and has a strong balance sheet now. They are in a good position to take advantage of the catalog market and a brand like Lillian Vernon is well known in the catalog/direct-mail market.”