Kansas City advertising icon Bob Bernstein now has the inside track to buy several Beauty Brands stores out of the company’s bankruptcy estate, court filings show.
If successful, Bernstein will be back in control of the salon and spa retailer that he founded in 1995.
Beauty Brands, which declared bankruptcy earlier this month, designated a company controlled by Bernstein and his son, David Bernstein, as the stalking horse bidder. In bankruptcy parlance, the stalking horse bidder is in position to purchase a bankrupted company’s assets unless a higher and better offer arrives.
A bankruptcy judge in Delaware filed an order approving Bernstein’s position as the stalking horse bidder following a hearing Wednesday morning, affirming Beauty Brand’s conclusion that Bernstein’s bid was the higher and better one.
“It’s an encouraging development. We are certainly in a strong position today and in the right place to take over the Beauty Brands company again,” Bob Bernstein said Wednesday afternoon. “But we certainly can’t say it is ours.”
When Beauty Brands filed for Chapter 11 protection from creditors, it entered into an asset purchase agreement with Hilco Merchant Resources and designated the Illinois-based company as the initial stalking horse bidder.
Last week, Absolute Beauty, a business entity run by Bernstein and his son, submitted a bid to buy 23 Beauty Brands stores for $4.65 million. Absolute Beauty argued that its bid was superior to that of Hilco Merchant Resources, which was characterized as a liquidation bid.
Absolute Beauty said its offer would keep 23 stores open, including those in the Kansas City area, and result in the continued employment of 875 workers.
The bankruptcy is scheduled for an auction in February at or before which time another bidder could try and mount a successful bid.
Bernstein’s company seeks to keep stores in the Kansas City and St. Louis stores open. Others it would continue running are select stores in Illinois, Texas, Iowa and Colorado.
Bernstein, who co-founded Kansas City advertising firm Bernstein-Rein and is credited with inventing the McDonald’s Happy Meal, launched Beauty Brands in 1995. He sold most of his stake in the company in 2014 to a California private equity group. The chain’s fortunes have not fared well. In December, Beauty Brands announced it would close 25 stores.