Hedge fund Whippoorwill Associates is about to get a discount it does not want from Loehmann’s, the bankrupt Bronx retailer.
Most of the $80 million Whippoorwill invested in the off-price chain will be lost, a sources close to the situation said Monday.
The 92-year old chain filed for bankruptcy in December and is liquidating.
Whippoorwill gained a majority stake Loehmann’s in 2011 when it emerged from an earlier bankruptcy.
Any proceeds from the bankruptcy sale occurring this week go first to senior lender Wells Fargo, and then to Whippoorwill, if any cash remains, the source said.
Whippoorwill did not return calls.
There is little movement in bankruptcy court suggesting there is interest in saving Loehmann’s.
“No one will relaunch the stores,” the source said. “I think the retail is done” although the name could resurface online.
Madison Capital has agreed to pay $7.5 million for the leases.
A suitor has agreed to pay just $850,000 for the intellectual property, the source said.
A team of SB Capital, Tiger Capital and A&G Realty has made the highest offer for the inventory, the source said.