Salt Life Approved For Liquidation Sale Of Main Asset Group

Bankrupt clothing and lifestyle company Salt Life received approval on Friday from a Delaware judge for the sale of its main brand’s assets, saying the winning bid will result in the liquidation of that business segment.

During a hearing in Wilmington, debtor attorney Jerry L. “Jay” Switzer Jr. of Polsinelli PC said the court-approved bidding and auction process for the Salt Life brand assets spurred a winning bid from a joint venture of Iconix International Inc. and Hilco Merchant Resources LLC to acquire those assets for a purchase price of $38.74 million.

The winning offer topped the second-place bid from stalking-horse bidder FCM Saltwater Holdings, whose last offer at auction amounted to a $37 million bid that would have kept the business operating.

“There was a large gap between the winning bid and the backup bid,” Switzer said. “FCM, the  stalking horse, didn’t continue bidding and obviously felt it wasn’t worth what Iconix and Hilco decided to bid.”

Several parties, including landlords, voiced their opposition to accepting the liquidation bid as the winning offer, but U.S. Bankruptcy Judge Laurie Selber Silverstein said that since the secured lenders in the case are severely undersecured, the debtor’s judgment to liquidate the assets through the higher bid was entitled to the deference of the court.

“The filing of bankruptcy often has unfortunate consequences,” Judge Silverstein said. “The unfortunate consequence here is that the sale of the assets of the debtor resulted in a higher price in a liquidation mode than in a rehabilitation, a reorganization or a sale of substantially all the assets as a going concern.”

She said the marketing and sale process had been approved earlier in the case and was a fair undertaking followed by the debtor to achieve the sale price that it did. The difference between the two bids were deemed by the debtor to be significant enough to declare the liquidation bid the winning offer, she said.

Salt Life filed for bankruptcy on June 30 and has been pursuing sales of its assets since. At Friday’s hearing, the debtor said it is finalizing terms on two other sale transactions that will net the estate more than $15.5 million.

The debtor is represented by Christopher A. Ward, Jerry L. “Jay” Switzer Jr. and Jeremy R. Johnson of Polsinelli PC.

The case is In re: Salt Life Beverage LLC, case number 1:24-bk-11468, in the U.S. Bankruptcy Court for the District of Delaware.

—Editing by Philip Shea and Emily Kokoll.