Rubie's Costume Co. has headquarters in Westbury and Melville.

Rubie's Costume Co. has headquarters in Westbury and Melville. Credit: Heather Walsh

Rubie’s Costume Co. hopes to emerge from bankruptcy by selling virtually all of its assets for $133 million, court documents show.

The Halloween giant is slated to make its case Thursday before Alan Trust, chief judge of the U.S. Bankruptcy Court for the Eastern District of New York. Unpaid creditors have filed court papers urging Trust to require mediation — or alternatively, to disapprove the deal.

Under the proposal, a new firm called Rubies II, LLC, would purchase the retailer, which has corporate headquarters in Westbury and sales headquarters in Melville. The LLC is a collaboration between Joel Weinshanker, chairman of the National Entertainment Collectibles Association Inc.; the investment advisory firm Atalaya; and the primary owners of the current company, the Beige family, court papers show. Rubies II anticipates employing a majority — about 400 — of the current company's workers, including president Marc Beige and executive vice president Howard Beige.

The $133 million transaction would cover $96 million in debt, pay $35 million in anticipated bills and add $2 million to the $7 million Rubie’s expects to have on hand, according to court filings. That $9 million would be used to wind down the old company, including paying about 55% to 60% of what is owed to creditors like FedEx Corporate Services Inc. and party supply companies Amscan Inc. and Unique Industries Inc., Rubie's noted in court filings.

A committee representing such creditors filed court papers asking Trust to push back the closing deadline from Sept. 30 to Oct. 7 so disagreements can be mediated.

The creditors argued that an independent expert should have been appointed to negotiate the sale on their behalf once the Beige family began exploring joining the new venture. The Beiges are considered creditors because they are entitled to rent payments from Rubie's, according to court filings. But the family plans to waive these bills and make other concessions in exchange for a 30% stake in the new company, court filings note.

"While the Beige Shareholders would retain equity and move on liability-free … unsecured creditors do far worse," the creditors' committee notes in a court filing. "The stark difference in outcomes is the result of [Rubie’s] advancing the interests of the Beige Shareholders over those of unsecured creditors."

Card & Party Giant, a Rubie’s competitor based in Illinois, filed paperwork objecting to the transaction. Card & Party Giant anticipates being entitled to money under antitrust cases pending against Rubie’s, according to court filings from the company’s attorney Aaron Schwartz. Schwartz said the proposal should be changed so the new company is responsible for penalties under the antitrust cases.

An attorney for Rubie's referred Newsday to court filings, where the company called the antitrust allegations frivolous and said the accusations should not halt the sale.

Marc Beige said in an affidavit, or written statement, that the investors conditioned the deal on his family joining Rubies II because its relationships with manufacturers and licensers are critical.

When Rubie's and five affiliated companies sought Chapter 11 protection in late April, Beige said he envisioned his family retaining control over a business they have run for decades.

The retailer had $183.4 million in assets and $71.1 million in liabilities, according to court papers.

Rubie's blamed several industry shifts for its financial straits, including competition with other manufacturers, insolvency among some of its trading partners and a decline in customers. The firm said COVID-19's impact on the lending market also contributed to its struggles.

Rubie’s discovered the best way to meet terms tied to a new round of financing was through a sale, Beige said in his affidavit. The court approved plans for an auction, and the proposal from Rubies II was used to help set the floor for other bids. A higher bid was deemed unqualified, so the Rubies II proposal moved forward, court papers show.

Beige said in the affidavit that the sale was preferable to simply liquidating — or selling — all of Rubie's assets, which would likely leave about 400 employees without jobs and creditors with less compensation.

"I know that the Sale represents the best outcome for all creditors and other stakeholders," Beige said in the affidavit.

Israel-Hamas conflict resumes ... Doug Geed's final East End Show ... Hometown Flower Co. opens Credit: Newsday

Santos expulsion vote ... National Christmas tree lighting ... Dickens Festival kick-off ... Feed Me: Best Pizza

Israel-Hamas conflict resumes ... Doug Geed's final East End Show ... Hometown Flower Co. opens Credit: Newsday

Santos expulsion vote ... National Christmas tree lighting ... Dickens Festival kick-off ... Feed Me: Best Pizza

Latest Videos

Newsday LogoYour Island. Your Community. Your News.Digital AccessOnly 25¢for 5 months