Court Denies Fruit of the Loom’s Procedures

Fruit of the Loom Inc. failed to win court approval of its proposed bankruptcy sale procedures, jeopardizing an $835-million offer for the underwear maker by Warren Buffett’s Berkshire Hathaway Inc.

U.S. Bankruptcy Court Judge Peter Walsh turned down Fruit of the Loom’s request to approve the procedures after Berkshire’s lawyer said the company wouldn’t accept less than $30 million if it was outbid for Fruit of the Loom, or the recovery plan based on Berkshire’s bid was rejected.

Officials of Fruit of the Loom and Berkshire said in court documents that if the procedures weren’t approved by the end of the month, the bid might be pulled.

“The $30 million could have a coercive effect on creditors voting on the plan, thinking they’d be throwing away $30 million” if they voted against the reorganization plan, Walsh told Fruit of the Loom’s lawyers.

Shares of Fruit of the Loom were unchanged at 24 cents in over-the-counter trading. Shares of Berkshire were unchanged at $67,500 on the New York Stock Exchange.