Multi-Color Corporation is not the only pending New Jersey bankruptcy case with something strange going on in the venue department. Eddie Bauer’s venue is very odd too.

Eddie Bauer filed for bankruptcy in the District of New Jersey this past February. The first to file entity was “13051269 Canada Inc.,” which is a Canadian corporation, headquartered in Bellevue, Washington. It apparently serves as a holding company for the Canadian operating company, Eddie Bauer of Canada Corporation.

On its petition, 13051269 Canada Inc. claimed New Jersey venue by virtue of the location of its “principal assets,” which are supposedly at 125 Chubb Avenue, 5th Floor, Lyndhurst, NJ 07071. That address is the headquarters of non-debtor SPARC Group LLC, which is the ultimate equity owner of Eddie Bauer. (An intermediate holdco, SPARC EB Holdings LLC bootstrapped its way into the New Jersey venue).

Now what assets comprise those “principal assets” is unclear–I would assume that a holding company’s principal asset is the stock of its Canadian opco subsidiary. Most Canadian company shares are held through the Direct Registration System, which is similar to our Depository Trust Company structure. If so, I don’t know what assets would actually be located in New Jersey. A beneficial interest (i.e., a “securities entitlement” in Article 8 parlance) does not have a physical location). But maybe they’ve got the physical stock certificates sitting somewhere in a vault on the 5th floor. That’s the thing–there’s no way to actually test the venue from the facts averred on the petition.

If it were just a matter of 13051269 Canada Inc., I wouldn’t bother writing up this post, but I don’t think that’s the end of the story. The second to file company was Eddie Bauer LLC, which holds the license to use the Eddie Bauer name in North American retail stores. On the second to file petition, venue was listed as appropriate both because of a bootstrap to 13051269 Canada Inc., which is what one would expect, AND because of principal assets.

Eddie Bauer LLC is a Delaware LLC, headquartered in Bellevue, Washington. It lists its principal assets as being at 1 American Dream Way, Suite B237, East Rutherford, NJ 07073. In other words, at a mall in Jersey. To be fair, it also references a rider that lists five store locations in New Jersey. But Eddie Bauer LLC operates some 175 stores nationwide. Are the five in Jersey (or just the one in East Rutherford) really its “principal assets”? And why bother listing this stuff if the bootstrapped venue with 13051269 Canada Inc. is sufficient?

My best guess is that someone recognized that 13051269 Canada Inc. didn’t really have a credible venue claim, so they went belt-and-suspenders by having Eddie Bauer LLC be the second to file and suggesting principal assets were also there based on the five retail locations.

Frankly, neither seems very convincing, although we’d need to know more about the 13051269 Canada Inc.’s supposed New Jersey-based asset.

Isn’t it interesting, however, to see companies that readily have Delaware venue strive to get into a New Jersey courtroom? What’s the motivation? Both have the same circuit level law. Is it simply a shorter commute from NYC? Or is it something else?