Carter Hawley’s Creditors May Seek Damages : Retailing: Court documents show panel is seeking authority to act on a 1987 restructuring.

Creditors of Carter Hawley Hale Stores are seeking authority to file damage claims against the ailing retailer stemming from its controversial 1987 restructuring, documents unsealed Tuesday reveal.

Separately, Dillard Department Stores has contacted Carter Hawley to request confidential information with an eye toward making a formal bid for the troubled retailer, separate bankruptcy court filings revealed.

However, Dillard has not yet signed a confidentiality agreement, which the Los Angeles-based retailer is requiring before giving out such information, the documents stated.

A spokesman for Carter Hawley, which is reorganizing under Chapter 11 of the federal bankruptcy laws, said he could not comment beyond the court filings. Dillard’s spokesman was not available. The parent of the Broadway department store chain has also received an offer from the Zell/Chilmark Fund.

Details of the attempt by Carter Hawley creditors to seek authority to file damage claims were revealed after U.S. Bankruptcy Judge James Dooley in Los Angeles unsealed several documents that had been submitted to his court by a Carter Hawley creditors committee. He had ordered the documents sealed in July.

Carter Hawley creditors have questioned whether the 1987 restructuring, intended to solve the retailer’s cash flow problems, doomed the company by loading it with more debt than it could bear. In that restructuring, Carter Hawley spun off its Neiman Marcus group to General Cinema, then Carter Hawley’s largest shareholder.

Tuesday’s unsealing was another step in a complex legal fight between Carter Hawley and the creditors committee over which body will have the upper hand in deciding the fate of the retailer. On Thursday, attorneys for Carter Hawley and the creditors committee will appear in U.S. bankruptcy court to argue for control of the retailer. At that hearing, Dooley may determine whether the creditors committee has authority to seek damage claims.

The creditors committee, represented by Los Angeles law firm Gibson, Dunn & Crutcher, contends in the documents that it is the proper body to investigate the restructuring and to claim damages under a murky legal concept called “fraudulent conveyance.”

The concept applies to transactions in which companies allegedly fail to receive a fair price for their assets, leaving the company too crippled financially to continue operating successfully.

The creditors committee contends that it is best positioned to file any claims because it has an independent eye in its investigation into the restructuring and subsequent legal proceedings. Carter Hawley, meanwhile, alleges that the committee would have conflicts because bondholders are members of the committee and are potential defendants in a fraudulent conveyance claim.