NEW YORK — Is the end near for Martha’s?
A bankruptcy judge here may order the doors closed on the 60-year-old upscale women’s apparel retailer on Sept. 23 if a suitor does not come forward.
Martha Phillips Management Co. Inc., which operates the one remaining Martha’s store — on Worth Avenue in Palm Beach — filed for Chapter 11 protection Dec. 22, 1992, and has been a consistent money loser since then.
Losses forced it to close three of its four stores, in Bal Harbor, Fla., and on New York’s Park Avenue, as well as its second Palm Beach location. Scott Rusczyk of Siegel, Sommers & Schwartz, counsel to Martha’s creditors’ committee, said the retailer just wasn’t generating enough cash to keep the units open.
Martha’s inability to generate enough cash to fund a Chapter 11 plan of reorganization has convinced Bankruptcy Judge Cornelius Blackshear that the company might be “administratively insolvent.”
Blackshear has put Martha’s assets up for sale and will accept offers for the company at the Sept. 23 hearing. If no purchaser steps forward, Blackshear could order Martha’s Chapter 11 reorganization converted to a Chapter 7 liquidation, closing the store quickly.
Blackshear could also decide to give the store more time, but with years of red ink behind it, that seems unlikely. Martha’s secured creditor, which has seen its debt virtually paid off; the store’s unsecured creditors, which expect a payout only if a purchaser comes forward, and the U.S. Trustee have taken no position, leaving the decision with Blackshear.
Rusczyk said the company, which has been open to outside investors since it filed, recently stepped up efforts to flush out a purchaser, but none has yet surfaced.
When it filed for Chapter 11 protection, Martha’s listed about $4 million in unsecured debt plus a $1 million tax liability. Assets at the time were placed at $4.4 million.
— Fairchild News Service