NEW YORK--The Hastings Group, formerly Hartmarx Specialty Stores, is expected to file a Chapter 11 bankruptcy petition within the next few days, sources said Thursday.
If it does file, Hastings will be just the latest in a rapidly growing list of retailers that have fallen prey to the tough retail climate and tightening credit.
In the past eight days, Jamesway, Elder-Beerman, Petrie Retail and Prange Way filed bankruptcies. In the past four months, Jay Jacobs, Bradlees Inc. and Caldor Corp. went bankrupt. Several other chains are said to be experiencing troubles, including Filene's Basement, which on Wednesday said it had plans to file bankruptcy.
"Hastings explored mergers, acquisitions, everything, and it's likely that within the next couple of days they'll be filing for Chapter 11," a source said. Michael Zaccaro, chief executive officer, did not return phone calls seeking comment.
The company operates 50 stores under the names Wallachs, Baskin, Jas. K. Wilson, Jack Henry and Capper & Capper and has annual sales of about $150 million. Women's apparel represents 25 percent of the company's volume.
"There is a core group of stores that is doing well, and there are some people who are interested in buying them," including current management, the source said.
For several weeks, management has reportedly shopped groups of stores to potential buyers, but couldn't complete any deals. A Chapter 11 filing would facilitate a purchase because bankruptcy law allows leases to be broken without penalty. It is expected that Hastings will soon begin going-out-of-business sales at its 50 locations while it searches for buyers or other solutions.
One source also said that Maverick Equity Partners LLC, the LBO fund that financed the Hastings deal, is expected to sell its position before the Chapter 11 filing.
The money-losing Hastings chain is not receiving credit from factors, has run short on operating cash and has seen sales tumble, a source added. In fact, one person close to the company said Hastings might have trouble making payroll soon, if it doesn't seek the shelter of Chapter 11.
In other Chapter 11 news this week:
* Petrie Retail said it may close as many as 316 of its 1,675 stores by early November. In a court hearing, the retailer, which filed for Chapter 11 protection Oct. 12, said it will definitely close 276 "unprofitable" stores and might shutter an additional 40 units.
Also at the hearing, Petrie got bankruptcy court approval to use $45 million in debtor-in-possession financing from a group of banks led by Chemical Bank and Chase Manhattan Bank, and up to $63 million in cash collateral.
* McCrory Corp. filed a disclosure statement and reorganization plan Thursday that provides general unsecured creditors with a 16.7 percent payout in senior subordinated notes with interest from Aug. 29.
Meshulam Riklis, chairman and ceo of the 550-unit variety store chain, will give McCrory a $50 million cash infusion in exchange for 6.9 million shares, a $20 million junior subordinated note and 500,000 stock appreciation rights.
McCrory, which filed for Chapter 11 protection in February 1992, proposes to pay holders of McCrory senior subordinated notes slightly more than 50 percent of their claims in cash along with 1.2 million shares in new stock to be issued by the company.
Since filing for bankruptcy, McCrory has dropped to 550 stores from over 1,000, said Paul Weiner, senior vice president and treasurer. He said he expects the company to hold a disclosure statement hearing sometime in December. McCrory operates stores under the McCrory, McLellan, HL Green, TG&Y, JJ Newberry, GC Murphy and SH Kress names. It will change its name to Newberry Co. upon emerging from Chapter 11.
* Goodvalley Fashions Inc., a women's apparel retailer at 729 Madison Ave., filed for Chapter 11 bankruptcy protection here Thursday.

To access this article, click here to subscribe or to log in.

load comments
blog comments powered by Disqus