Path Cleared for Federated to Obtain $400-Million Loan

Opposition to Federated Department Store Inc.’s financing proposal collapsed Thursday night, clearing the way for a federal bankruptcy judge to allow the retailer to obtain a $400-million loan.

Judge J. Vincent Aug Jr. said he would review a proposed compromise between Federated and a committee representing unsecured creditors, who are mainly merchandise suppliers.

“I would see no impediment to my signing the order tomorrow morning,” Aug said, which would allow Federated to draw on the loan.

The loan from a 90-bank syndicate headed by Citibank of New York would be in addition to a $1-billion financing package allowing Federated to sell credit card receipts to a subsidiary, Federated Credit Corp. The credit division wasn’t among those that filed Jan. 15 for Chapter 11 bankruptcy protection.