Judge approves sale of Duluth company 50 Below's assetsA U.S. Bankruptcy Court judge late Wednesday approved the sale of 50 Below’s assets to two companies, including one that vows to keep jobs and the company in Duluth.
By: Candace Renalls, Duluth News Tribune
A U.S. Bankruptcy Court judge late Wednesday approved the sale of 50 Below’s assets to two companies, including one that vows to keep jobs and the company in Duluth.
50 Below, which has about 225 employees, designs, builds and maintains websites. Its other services include hosting e-commerce stores.
Judge George Kishel approved the sale of the company’s retail division to ARI, a Milwaukee-based software company, for $3 million.
“We’re very excited,” said Roy Olivier, ARI’s president and CEO. “Our goal is to continue the business and invest in its growth and its profitability in the region.”
ARI had its eye on 50 Below’s power sports division for some time, even attempting to buy the company last year. But 50 Below’s owners opted not to sell.
“50 Below has been more successful in power sports than us,” Olivier testified in Duluth. “This is a unique opportunity to grow our business and increase market share.”
Olivier said ARI will merge its power sports division with 50 Below’s in Duluth, but ARI will keep its other divisions at their current sites.
“We’ll keep the vast majority of (50 Below) employees here and eventually grow jobs,” he said.
Kishel also approved the sale of 50 Below’s financial services division to San Diego-based Emerald Connect for $3.5 million. Those accounts will leave Duluth.
The sales are expected to close in two weeks.
Both buyers were recommended by Nauni Jo Manty, appointed 50 Below’s trustee after the company filed for bankruptcy Aug. 29, claiming liabilities of about $12 million. Her decision to sell the company’s assets to move it out of Chapter 11 faster drew eight bids, ranging from $100,000 to $9 million for the whole company.
Kishel’s approval of ARI didn’t come without a fight from runner-up Dominion Enterprises of Norfolk, Va., along with attorneys representing the IRS and the Minnesota Department of Revenue. 50 Below owes the IRS about $8.9 million and about $1 million to the state, according to court records.
They argued that Dominion bid more at $3,150,000 and was a better financial risk than ARI. They also accused Manty of giving ARI preferential treatment during the closed bidding procedure.
But Manty said ARI intended to keep the business and jobs in Duluth, and she believed Dominion would eventually shut it down.
“I don’t want to see a company go out of business if I can help it,” she testified.
Lori Stacy, senior vice president of Dominion’s business solutions, testified they would leave the business as is for six months, then integrate it into the rest of the company.
“We have no intent to shut down business in the foreseeable future,” she said.
ARI also is willing to cover about $17,000 in employee claims and an infringement case against 50 Below by one of ARI’s subsidiaries.