Next Week in Bankruptcy

On Wednesday, biofuel maker KiOR Inc. will go before a Wilmington, Del., bankruptcy judge to seek final approval of its chapter 11 reorganization plan.

Under the proposed plan, KiOR will turn over control of its business to lender Pasadena Investments LLC—a company affiliated with venture capitalist and KiOR co-founder Vinod Khosla—in exchange for $16 million in debt forgiveness.

KiOR’s unsecured creditors, owed more than $79 million, voted overwhelmingly to reject the plan, but all other creditor classes approved it unanimously, court papers show.

The plan is also facing objections from a federal bankruptcy watchdog as well as the Mississippi Development Authority, which holds the bulk of KiOR’s unsecured debt.

Founded in 2007 by Mr. Khosla’s Khosla Ventures and Dutch company Bioecon, KiOR converts wood chips, logging residue and other biomass into renewable crude oil. The company, based in Pasadena, Texas, filed for chapter 11 bankruptcy protection in November.

Also Wednesday, another Wilmington judge will hear from Frederick’s of Hollywood Inc., which recently canceled an auction of the company and plans to ask for approval of a sale to lead bidder Authentic Brands Group Inc.

Frederick’s, a Los Angeles-based lingerie chain, said no qualified bidders challenged the $22.5 million offer made by Authentic Brands for Frederick’s intellectual property, some inventory and its e-commerce business.

Authentic Brands owns several well-known brands, including Jones New York, Juicy Couture, Hickey Freeman and the intellectual property of iconic entertainment and sports figures including Marilyn Monroe, Michael Jackson and Muhammad Ali.

Frederick’s, founded in 1946, closed all of its retail stores in April ahead of its bankruptcy filing April 19 with the offer from Authentic in place and $11 million in bankruptcy financing from its lender, Salus Capital Partners.

Frederick’s blamed its fall into bankruptcy on increased competition from other retailers, decreased foot traffic in malls and weakened discretionary spending by its target customers.

On Tuesday, failed discount retailer Alco Stores will ask for final approval of its liquidation plan.

Alco Stores filed for bankruptcy last year and turned over its 198 stores, virtually all located in small towns in America’s heartland, to liquidators.

The company now plans to use the money raised from various asset sales to pay off secured lenders Wells Fargo and CIT—owed $104 million—trade creditors owed $24 million and others.

Under the company’s liquidation plan, Alco’s unsecured creditors will recover between one cent and 15 cents on the dollar for their claims. As is typical in bankruptcy cases, equity holders in the publicly traded company will get nothing.

Alco’s stores—which sold everything from appliances and furniture to clothing and groceries in stores across 23 states—were located in towns of fewer than 5,000 residents, and Alco specifically targeted areas not already serviced by Wal-Mart and other larger retailers.

The 113-year-old business sought bankruptcy protection in October.

-Joseph Checkler and Patrick Fitzgerald contributed to this article.

Write to Tom Corrigan at [email protected]