Court Backs Macy’s Right to Plan Its Reorganization

A bankruptcy judge in New York on Friday reaffirmed R.H. Macy & Co.’s exclusive right to file a detailed bankruptcy reorganization plan, which officially puts a Federated Department Stores bid for control of Macy on hold.

Under the ruling by Judge Burton R. Lifland, only Macy can submit a detailed reorganization plan to creditors between now and Aug. 1. Macy, Federated and a group of Macy bondholders had filed preliminary reorganization plans with the court May 9. Lifland ruled Friday that Macy has made enough progress in negotiations with creditors to earn the right to submit a more detailed plan.

Sources close to negotiations said Friday that neither Macy’s nor Federated’s preliminary reorganization bids have adequate creditor support.

Federated has informed creditors that it is willing to sweeten its May 9 preliminary offer for control of Macy, according to sources. Macy would be expected to counter a new Federated offer.

Macy, whose holdings include the Bullock’s and I. Magnin department store chains, is expected to file a detailed plan soon and will then try to get the creditor support necessary for court approval of it.

If Macy is unable to obtain adequate creditor support by the Aug. 1 deadline, the court could ask Federated or other interested parties to submit rival plans.