Hobbico hopes to find a buyer at auction set for March 26

Hobbico hopes to find a buyer at auction set for March 26

CHAMPAIGN — Having filed for bankruptcy protection in January, Hobbico plans to auction its assets March 26 in Chicago in a bid to find a buyer.

The hobby-product distributor, which employs more than 300 people in the county, placed ads Wednesday in The News-Gazette and USA Today with notices of the auction, as required by the bankruptcy process.

In the past couple days, former employees also told The News-Gazette they had received notices about the auction, which will be followed by a hearing on March 28.

"The Company anticipates that if the Court approves the sale at the March 28 hearing, the sale will close on or around April 6th, 2018, at which time new ownership will take effect," Hobbico said in a statement provided by human resources director Howard Salazar. "While it is too early to know the results of the auction or sale hearing, the Company and the court will be pursuing a path that provides the best outcome for both the creditors and the future of Hobbico."

When Hobbico filed for Chapter 11 bankruptcy protection, it said it had added too much debt and faced "an increasingly competitive industry, market headwinds and a series of one-off events with key suppliers."

It also said that it had an estimated 200 to 999 creditors, $10 million to $50 million in assets, and $100 million to $500 million in liabilities.

In recent court documents, Hobbico also indicated it had $114 million in revenue in 2017, down from $175 million in 2016.

Hobbico asked for a minimum bid for all the assets at $38 million, or less than that for different parts of the business, according to court documents.

In bankruptcy court filings, Hobbico's lawyers have said they are hoping for a "stalking horse" buyer, and the company's investment banker, Lincoln Partners Advisors, has contacted 432 potentially interested parties, "of which 184 entered into confidentiality agreements."

A "meaningful number" of those indicated interest in "substantially all the assets of the Debtors or material business units of the Debtors," attorney Matthew Talmo wrote. "Based on discussions with various of the proposed purchasers described below, the Debtors believe that, prior to the proposed Auction described below, they may be able to enter into one or more agreements ... for the going-concern sale ... of the Assets with one or more potential purchasers."

In stalking-horse bids, the seller provides certain incentives and protections to a potential buyer, the "stalking horse," to essentially set the floor of the auction bidding.

Hobbico was formed in 1985, when Clint Atkins combined Don Anderson's Great Planes Model Distributors and Bruce Holecek's Tower Hobbies. It is one of the largest hobby-product distributors in the country.

It has employees around the country at various locations, including more than 300 at its headquarters at 2904 Research Road, C.

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