NEW YORK — Bankrupt Warnaco Group lost $2 million in the month ended Aug. 3 on revenues of $84.6 million.
This story first appeared in the September 16, 2002 issue of WWD. Subscribe Today.
The latest monthly results were reported last week in a filing with the Manhattan bankruptcy court. As reported, Warnaco filed a voluntary Chapter 11 petition to restructure its operations on June 11, 2001.
The latest loss includes reorganization costs of $4.4 million for the period.
For the seven months ended Aug. 3, the loss was $718.3 million on revenues of $749.7 million. Reorganization costs in the period totaled $60 million.
Warnaco has until Sept. 30 the exclusive right to file a plan of reorganization. Until Nov. 30, it has the right to solicit acceptances to the plan from its creditor constituent groups. The company has said it expects to file a plan by the end of this month.
In the notes to the financial statements filed with the bankruptcy court, the company said it is “in the process of reviewing [its] operations and identifying assets available for potential disposition, including entire business units of the company. However, there can be no assurance that the company will be able to consummate such transactions at prices the company or the company’s creditor constituencies will find acceptable.”
As reported, Warnaco has been involved in on-and-off discussions with VF Corp. for the sale of certain assets. A source familiar with the negotiations said that price has been a stumbling block.
Meanwhile, Warnaco is in the process of closing some of its outlet stores, including 26 Calvin Klein outlets. Bankruptcy court approval is pending regarding store closing sales at the 26 sites.
According to court papers concerning the Calvin Klein outlets, the “majority of the stores are either unprofitable or are marginally performing.” Warnaco is awaiting bids from various entities that routinely conduct store closing sales, which, the court papers said, are likely to commence by the end of October to coincide with the holiday selling season.
Separately, former chief executive officer Linda Wachner’s quest for $25.1 million severance and Warnaco’s banks’ related pursuit of details about her personal finances remained unresolved points of contention between the parties.
The banks’ counsel, in a letter to the court, stated that, as a condition for excluding certain details from the discovery process, it wanted Wachner to agree that she had “suffered no economic hardship or other injury whatsoever as a result of the termination of her employment agreement” on Nov. 16, 2001. The banks’ counsel said Wachner refused to do so and “continues to insist that she has suffered ‘harms’ as a result of the termination.”
Wachner’s attorneys earlier had advised the court in a letter that Wachner’s personal finances were “in no way relevant either to her contractual entitlement to severance or to the administrative status of that severance claim.
“Moreover,” the letter continued, “Mrs. Wachner has never asserted that she is impoverished or will be unable to support herself in the absence of a severance award.”