A bankruptcy court judge approved bidding rules proposed by figurine-maker Enesco Group Inc. for the sale of its assets at an auction scheduled for Feb 14.

The Itasca, Ill.-based company, which designs and sells giftware and home decor items, said it plans to sell all its assets, with Tinicum Capital Partners II LP opening bidding at the auction. All other initial bids are due by Feb. 12.

As part of its “stalking horse,” or lead bidder, agreement, Tinicum is entitled to a 2.5 percent breakup fee if it’s outbid.

Tinicum, a New York investment firm, has agreed to open bidding for Enesco’s assets with an offer that would cover the company’s senior secured debt. Enesco said it owes its senior lenders about $56 million.

Enesco filed for Chapter 11 protection in the U.S. Bankruptcy Court in Chicago on Jan. 12 with the sale deal in hand. Companies trying to sell assets while operating in Chapter 11 protection must conduct an auction to assure creditors that the best offer is obtained.

Enesco said it’s been experiencing “significant cash flow problems” over the past few years. The company, which defaulted on its senior debt last year after failing to obtain a commitment for long-term financing, began marketing its assets in August.

According to court papers, the company negotiated with a potential purchaser for about a month last autumn, but terminated exclusive discussions in October.

Posted: 01|24|07 at 9:12 am. Filed under: US News.