WASHINGTON — Ronco Corp. has called off a planned auction for its business after failing to attract any qualified bids for its collection of rotisserie ovens, knife sets and food dehydrators and will sell its business to a unit of Los Angles private equity firm Marlin Equity Partners LLC.
Ronco said in court papers filed in its bankruptcy case that it expects to clear about $6.5 million in cash from the sale. But that won't be enough to pay off secured lender Laurus Master Fund Ltd., which is owed $8.1 million.
The company said it had hoped to receive higher offers than Marlin Equity's stalking-horse bid. But no rival bidder stepped forward before the July 30 deadline, forcing Ronco to pull the plug on the auction.
Companies in Chapter 11 that want to sell their assets must submit to an auction even when a buyer is available. A stalking-horse bidder is often designated to set a floor price and make sure a company receives a fair price for its assets.
Laurus, which was entitled to bid the full amount it was owed by Ronco under bankruptcy law, did submit a "back-up credit bid" in case the Marlin Equity deal fell through. Laurus withdrew that bid on Wednesday, according to court papers.
Judge Geraldine Mund of the U.S. Bankruptcy Court in Woodland Hills, Calif., scheduled a hearing for Tuesday to approve the sale.
Ronco filed for Chapter 11 on June 14, eying a quick sale of its business. The Simi Valley, Calif., company wants to complete a sale by the middle of August.
The company was founded in 1958 by Ron Popeil, the legendary pitchman who appeared in many of Ronco's ubiquitous TV infomercials. Popeil sold the company for about $56 million two years ago.
Ronco listed $13.9 million in assets and $32.7 million in debt in its Chapter 11 petition.
The gadget seller's bankruptcy was marked by a bitter spat between the company's current and former chief executives that involves allegations of fraudulent billing, wasteful spending and insider dealings.
Former Ronco chief executive Richard F. Allen alleged a Houston investment bank didn't properly look into Ronco's dire financial situation before lining up a group of investors in 2005 to buy Ronco from Popeil.