Eddie Bauer Creditors Oppose Cash Arrangement in Bankruptcy

Junior creditors of bankrupt clothing retailer Eddie Bauer LLC objected to the company’s use of cash collateral and the protections it aims to provide nonbankrupt affiliates.

Eddie Bauer’s lenders are oversecured because they have recourse to collect on debts from other units controlled by Catalyst Brands, a committee representing the creditors said in a Wednesday filing in the US Bankruptcy Court for the District of New Jersey.

The committee objected to the broad grant of protection liens and superpriority claims for the secured lenders that are payable through unencumbered assets, including avoidance actions and commercial tort claims.

The secured lenders ...