NEW YORK — Aileen Inc., burdened by its unsuccessful quest to restructure its credit agreement and poor results, said it is experiencing a “serious cash shortfall” that might force it to reorganize under Chapter 11.
The company said it has yet to reach an agreement with its lender, NationsBank of California, concerning the bank’s $4 million unsecured revolving credit loan and a $744,000 term loan secured by equipment with a book value of $1.3 million.
Meanwhile, the firm reported a $1.1 million loss in the fourth quarter ended Oct. 30 and a $4.8 million loss for the full-year. In the year-ago quarter Aileen lost $364,000, but for the year, the company earned $2.6 million, or 19 cents a share. Sales in the quarter fell 10.8 percent to $14.2 million from $15.9 million, and comparable-store sales plunged 19 percent. Sales for the year dipped 2 percent to $60.3 million from $61.6 million, and same-store sales dropped 13 percent.
As a result of a reduction in its revolving credit line to $4 million at the end of the third quarter from a previous $6 million and the significant decline in sales in the fourth quarter, Aileen said a substantial portion of past due trade payables are at least 60-days late.
Rent payments have also been delayed.
“Without a satisfactory new credit facility or other financial accommodations from the bank and the company’s vendors in the near term, the company may be forced to seek to reorganize under the federal bankruptcy laws,” Aileen said.