Nine West Settlement Offer Could Cost Sycamore, KKR $470 Million

(Bloomberg) -- Independent directors of Nine West Holdings Inc. proposed that Sycamore Partners LLC and a unit of KKR & Co. pay $470 million to settle potential lawsuits stemming from Sycamore’s 2014 leveraged buyout of the now-bankrupt shoe retailer.

An ad hoc group of unsecured creditors that had been negotiating with Nine West disclosed the offer by the independent board members in bankruptcy court papers Monday. The group, which includes Aurelius Capital Management LP, Contrarian Capital Management LLC, Paloma Partners Management Co. and Centerbridge Partners LP, was negotiating with Nine West’s owners for about a month before the discussions stalled, the filings show.

The filing didn’t detail what potential lawsuits could be brought against KKR and Sycamore for their roles in the company’s financial woes.

Talks between the parties will resume, said the group, which is working with TRS Advisors LLC, the firm founded by Todd Snyder after he left Rothschild Inc.’s restructuring practice in 2017, and Wilmer Cutler Pickering Hale & Dorr LLP is serving as counsel. The group’s most recent proposal included a $40 million rights offering that would involve convertible preferred equity and be backstopped by certain holders of 2019 and 2034 notes, according to separate documents reviewed by Bloomberg.

Representatives for Sycamore and KKR declined to comment.

The official committee of unsecured creditors received court permission last month to expedite a probe into the 2014 leveraged buyout of Nine West, which a KKR unit helped finance. To pay for the purchase, Sycamore issued debt through Nine West and then bought three of the subsidiaries for its own direct ownership, at what the group’s lawyers say was a below-market price. KKR also ended up with an equity stake.

The case is Nine West Holdings Inc., 18-10947, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

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