NEW YORK — The Leslie Fay Cos., citing its “significant progress in achieving profitability,” said it will seek bankruptcy court approval to reduce its credit facility by 33 percent.
The new arrangement would lessen the amount of borrowings to $100 million from $150 million, reflecting strategic management decisions and consolidations, which have improved the company’s cash flow, the company said in court documents.
The current deal expires next Tuesday.
Under the terms of the new agreement, to run through July 31, 1995, Leslie Fay would have to maintain earnings — before reorganization expenses, interest, taxes, depreciation and amortization (EBRITDA) — of at least $20 million a year.
As reported, Leslie Fay, operating in Chapter 11 since April 1993, expects to show EBRITDA of about $28.5 million for fiscal 1994.
Bankruptcy Judge Tina Brozman will hear the motion on April 26.
Separately, Leslie Fay asked the bankruptcy court for permission to sell its 50 percent equity interest in Torren Fashion Inc., a joint venture between Leslie Fay and Interamericana Products S.A., back to the Dominican Republic-based apparel finisher for $350,000.
Leslie Fay paid $500,000 in 1989 for the Torren Fashion stake. The deal requires bankruptcy court approval.
Meanwhile, the Leslie Fay-ILGWU battle moved into Federal Court.
The manufacturer filed suit against the ILGWU, charging that certain provisions within their collective bargaining agreement are illegal.
Leslie Fay said it filed the suit in anticipation of the ILGWU filing a fair labor practice charge with the National Labor Relations Board, accusing the apparel maker of refusing to bargain in good faith.
In the suit, Leslie Fay admits it owes the ILGWU liquidated damages for violations of agreements calling for payments by the company on imported merchandise and production by non-ILGWU contractors. However, the company said it has refused to pay because doing so would “constitute unlawful payments to a labor organization in violation of the Labor Management Relations Act” and subject itself and the ILGWU to criminal liability. Lawyers for the ILGWU could not be reached for comment. As reported, the union is battling the company on its plan to shut down all its U.S. production.