JAMESWAY FILES CH. 11

Byline: Jeff Siegel

NEW YORK--Only nine months removed from its last bout with bankruptcy, Jamesway Corp. on Wednesday again filed for Chapter 11 protection, this time seeking to liquidate all its assets.
The bankruptcy had been expected for some time. The filing is now likely to signal the beginning of negotiations between Jamesway and possible buyers of some of assets.
Observers are betting other discounters will emerge as possible purchasers of many Jamesway locations. Under a Chapter 11, purchases are a bit easier because acquirers could break leases without penalties and cherry-pick locations and assets.
This summer, Ames Department Stores, Caldor Corp. and Hills Department Stores signed confidentiality statements to look at Jamesway. Since then, Caldor has filed Chapter 11 and Hills has been drained in a costly takeover fight, leaving Ames as a possible suitor for Jamesway assets.
Calls to Ames Wednesday were not returned.
Cash-strapped Jamesway, based in Secaucus, N.J., was unable to reverse its long-running series of miserable sales results, the most recent being a 9 percent slump in same-store sales for September.
For the year to date, comparable-store sales are off 8 percent. The company posted a $4.3 million loss in the second quarter ended July 29.
In late June, with losses mounting, Jamesway contacted investment banker Financo Inc. to try to find a white knight, but no purchaser came forward. As results continued to spiral downward, vendors and factors, already on guard because of the fierce retail climate that has claimed once-prominent regional discounters like Bradlees and Caldor, withdrew their support.
Also, Jamesway had almost depleted the $115 million credit facility it signed with CIT Group/Business Credit when it left Chapter 11 in January.
The 90-unit chain listed liabilities of $127.7 million, including unsecured debt of $34.3 million and assets of $185.3 million..
With the filing, Jamesway agreed to a $25 million debtor-in-possession financing deal with CIT Group/Business Credit. An interim hearing is set for Monday.
Hours after filing the petition, Jamesway got bankruptcy court approval to use $5.3 million in cash collateral and to pay recently fired employees up to $4,000 each. The ability to use cash collateral extends through Monday.
Steven Fox, of Kaye, Scholer, Fierman Handler & Hayes, counsel to Jamesway, refused to speculate on the size of a payout unsecured creditors might expect, but noted that he is "hopeful" all creditors would receive 100 percent on their claims. There was no word on when Jamesway would begin going-out-of-business sales.
According to the bankruptcy petition, Jamesway's largest unsecured creditor, American Greetings, Fairfield, N.J., is owed $8.9 million. Three apparel companies are among the 20 largest unsecured creditors--Sara Lee Knit Products, Winston-Salem, N.C., $423,599; Wrangler Inc., Greensboro, N.C., $320,752, and Fieldcrest Cannon Inc., $201,551.
In another development, Filene's Basement, issued a response to comments by Dan Dorfman on Wednesday's CNBC program, "The Money Wheel," where Dorfman implied that Filene's Basement may be on the verge of a Chapter 11 filing.
"This is not the case; the Basement has no plans or considerations for such an action. As a matter of record, the company has in fact closed on an expanded credit facility, which provides greater flexibility in its operating covenants. Additionally, the company said it"expects increased availability from its factors as a result of the recently announced agreement," the statement said.--Fairchild News Service

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus