Loehmann’s Holdings Inc., the New York-based seller of discounted designer goods operated by Whippoorwill Associates Inc., sought bankruptcy protection for a third time amid growing competition.
Loehmann’s listed assets of as much as $100 million and debt of as much as $500 million in a Chapter 11 petition filed in U.S. Bankruptcy Court in Manhattan yesterday.
Started by Frieda Loehmann in Brooklyn in 1921, the chain has 40 stores in 11 states that sell designer goods at discounts of 30 percent to 65 percent, according to the company’s website. Loehmann’s carries brands such as Michael Kors and Calvin Klein.
Loehmann’s is no stranger to bankruptcy court, having sought Chapter 11 protection for the first time in May 1999. The company blamed that filing on declining sales and burdensome debt. It emerged from bankruptcy the following year after cutting more than $140 million of debt, closing 25 stores and rejecting takeover offers from two competitors.
The company filed for Chapter 11 protection a second time on Nov. 15, 2010, and emerged in March 2011 after reducing long-term debt by about $110 million. The reorganization was financed in part with a $25 million investment from Istithmar Retail Investments and Whippoorwill, the owner of 70 percent of the secured notes. Istithmar retained a minority stake in the reorganized company.
Istithmar bought Loehmann’s in 2006 for $300 million. Crescent Capital Investments Inc., an Atlanta-based private equity firm, had acquired the chain in 2004 for $177 million, according to Standard & Poor’s.
U.S. retail sales dropped during the economic slump that began in 2007 as consumers, whose spending accounts for about 70 percent of the U.S. economy, tried to conserve cash.
Other retailers have blamed the slump for their bankruptcies, including Big M Inc., the owner of women’s clothing chains Annie Sez and Mandee. Discount apparel chain Syms Corp. last year won approval of a bankruptcy reorganization plan that converted it into a real estate holding company.
Loehmann’s is seeking court approval of auction procedures for the selection of a liquidation firm to assist with store-closing sales. A joint venture composed of SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty Partners LLC would be the opening bidder at an auction.
The bid provides for a purchase price of $19 million in cash subject to certain adjustments; 25 percent of any net proceeds received in respect to any sale of additional agent merchandise; 75 percent of the proceeds of certain consignment goods; 25 percent of net proceeds for any disposition of intellectual property and real property leases; and the assumption of other assumed liabilities, according to court papers.
Loehmann’s asked the court to speed up the transaction and requested interim approval of bidding procedures within two days of the petition date and final approval of the sale no later than Jan. 2, 2014, according to court papers.
“Based on discussions with liquidators, the debtors believe that delaying the sales by only two weeks will lower the sale price by as much as 2 percent off the potential guaranteed amount paid by the liquidators, equal to approximately $1 million of value,” the company said in court papers.
The case is In re Loehmann’s Holdings Inc., 13-bk-14050, U.S. Bankruptcy Court, Southern District of New York (Manhattan).