Rosy Blue, Vijay Gold Worry Sears Will Sell Consigned Goods

Rosy Blue and Vijay Gold have filed limited objections to Sears Holding Corp.’s motion to liquidate 142 stores as part of its Chapter 11 process, arguing the plan is unfair to vendors that have provided merchandise on consignment.

Sears’ proposal to liquidate all the inventory at those stores, whether it owns the inventory or not, does not respect the right of companies with consigned merchandise at those retailers, argue the objections from Rosy Blue and Vijay Gold, the business name for Shanti Corp.

Both objections cite as backup the 2008 bankruptcy of Whitehall Jewelers, the once-prominent jewelry chain. The judge in the Whitehall case, following a contested hearing, blocked plans by Whitehall’s backers to sell its consigned merchandise and keep the proceeds for itself, ruling the company needed to have either adequate protection for or assent from the consignors before it launched the sales.

Rosy Blue and Vijay have perfected their interests in the merchandise in accordance with the Uniform Commercial Code, say the filings, so therefore their “interest in those products is senior to any liens or claims held by another secured party.” At press time, attorneys for Sears Holdings have not responded to the motions.

Both companies are represented by New York City law firm Moses & Singer, which also played a role in the Whitehall Jewelers bankruptcy.

Retail Dive pointed out that the status of consigned goods recently became an issue again in the bankruptcy of Sports Authority, though so far the judge has indicated a desire to protect the companies with merchandise on consignment.

Also in the proceedings, watchmaker Invicta filed a motion to reclaim nearly $400,000 worth of watches that it claimed that it sent to Sears but has not been paid for.

Sears Holdings, which also owns the Kmart department store, filed for Chapter 11 on Oct. 15 in United States Bankruptcy Court for the Southern District of New York.

Sears bankruptcy papers can be seen here.

(Image courtesy of Sears Holdings)

JCK News Director