Mervyns, the bankrupt Hayward, Calif.-based midtier department store chain, said on Thursday that it received interim bankruptcy court approval of its $465 million debtor-in-possession financing facility.
The final hearing is set for Aug. 26. The facility is provided by Wachovia Capital Finance Corp. as the agent.
Mervyns, the $2.5 billion chain with 177 stores in seven Western and Southwestern states, filed a voluntary petition for bankruptcy court protection on Tuesday in Delaware. As part of the hearing for “first-day” motions, the court also approved payment of pre-petition employee wages. Meanwhile, the DIP facility will be used to pay vendors for goods and to provide financial stability for operations while the company operates and restructures during the bankruptcy process.
“With the bankruptcy court’s prompt approval of our DIP financing and first-day motions, we are moving forward with our reorganization under Chapter 11 while maintaining normal operations in our stores,” said John Goodman, chief executive officer of Mervyns. “We are pleased that we can continue to serve our customers and purchase goods and services from our vendors as we seek to implement strategies to restructure our operations, strengthen our balance sheet and position Mervyns to compete more effectively.”