NEW YORK -- Woodward & Lothrop, one of the last over-leveraged retailers to remain outside the bankruptcy courts, finally succumbed to its debt load and entered Chapter 11 proceedings Monday.
This confirms reports in these columns on Jan. 13.
The filing, made in New York while the court was officially closed in observance of Martin Luther King Jr. Day, was reminiscent of Federated Department Stores, which opened the Cincinnati court on the same holiday four years ago to make its bankruptcy filing.
The W&L petition lists total liabilities of $659.4 million and assets of $608.2 million. To assist in the reorganization, W&L said it has lined up, subject to bankruptcy court approval, a $300 million debtor-in-possession financing package from CIT Group.
Meanwhile, Arnold H. Aronson resigned as chairman and chief executive officer, following an unsuccessful attempt to acquire the 113-year-old Washington, D.C., retailer in the last few weeks.
In a telephone interview, Aronson said his recent effort to acquire the company was part of an agreement with Taubman made five years ago when he came on board. "It was decided that should ownership or other things change I could have a crack at the company," said Aronson, adding that he lined up a group of unidentified "brand name" equity investors and investment bankers three months ago.
However, the offer, which he proposed a few weeks ago, failed for a variety of reasons, which Aronson would not reveal. "The company had a lot of promise, and I would have liked to have taken it outside Chapter 11," he said.
Prior to the Chapter 11 filing, management owned 16 percent of the company stock, while Taubman owned 84 percent.
Aronson declined to elaborate on his future plans, only saying that he would be returning to New York City, where he owns an apartment.
Aronson, who joined the chain in 1989, is succeeded by Robert B. Mang, W&L's president and chief operating officer since 1991. Robert J. Mulligan, vice chairman of W&L, has been given the additional title of chairman of Woodward & Lothrop Holdings Inc. and will oversee the chain's reorganization.
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