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Harry & David to emerge from bankruptcy

A judge approves Harry & David's reorganization plan, which will give senior note holders control of the fruit and treats retailer in exchange for canceling more than $200 million in debt.

August 31, 2011|Bloomberg News

Harry & David Holdings Inc., the famed fruit and treats retailer that has been filling mail orders since the 1930s, said it would emerge from bankruptcy protection in mid-September.

U.S. Bankruptcy Judge Mary Walrath in Wilmington, Del., signed the final order after giving tentative endorsement of the company's reorganization plan earlier this month.

"We've reached a significant milestone for Harry & David and are excited to emerge from the Chapter 11 process as a stronger company," interim Chief Executive Kay Hong said in a statement Tuesday.

Harry & David filed for bankruptcy protection in March, blaming competition from Internet retailers and warehouse-style stores and the recession.

The Medford, Ore., company's modified plan resolved the objection of the Pension Benefit Guaranty Corp. over the classification of its claim. Under the plan, the PBGC will get a claim of $36 million and in return won't appeal Walrath's decision to terminate the pensions of more than 2,700 past and present employees.

PBGC's claim will get the same cash treatment as unsecured claims. Unsecured creditors supported the plan, which will pay them 10% of their claims in cash, with 40% of that paid in 2012 and the rest in 2013. Senior note holders will get control of Harry & David in exchange for canceling more than $200 million in debt.

Before filing, the company reached agreement on a reorganization plan with holders of 8% of the senior notes, including Wasserstein & Co.

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