Perfumania Holdings Inc. filed for Chapter 11 bankruptcy court protection in Delaware on Saturday.
The Bellport, N.Y.-based firm in February began considering its strategic options. It operates about 226 stores, mostly in malls, where traffic has slowed for all retailers.
Not included in the filing is Parlux, the company’s wholesale business, which Perfumania acquired in April 2012. Parlux has the distribution rights to fragrances such as Rihanna and Jessica Simpson, as well as the rights to President Donald Trump’s Empire and Success fragrances and Ivanka Trump’s fragrance. The lines from its wholesale business are sold at off-pricers and discounters, as well as at many mall anchor department stores.
According to a court document filed with the bankruptcy court, the retail operation sells “fragrances and related products at discounted prices up to 75 percent below the manufacturers’ suggested retail prices.” The company-owned web site offers a selection of the more popular products for sale online.
The filing is considered a pre-packaged bankruptcy, which means it also filed a joint plan of reorganization that calls for the closure of underperforming stores.
The petition said that as of April 29, total assets were $304.7 million, while total liabilities were $253.9 million.
Among the top three unsecured creditors are: MB Fragrances LLC, South Plainfield, N.J., $829,473; Puig USA Inc., New York, N.Y., $454,382, and HFC Prestige Products Inc., Cincinnati, Ohio, formerly with Procter & Gamble and now a part of Coty Inc., $343,002.
Michael Katz, Perfumania’s president and chief executive officer, said, “There will be no changes to our license agreements and we will continue to uphold our obligations, and our valued vendors and suppliers will be paid in full.”
He said that the filing will allow the company to adapt more quickly to the shift in consumer shopping habits and focus more of its resources to an online strategy.
Katz, who joined the company in 2004, said in a court document that equity holders will have the opportunity to receive $2.00 a share in exchange for providing a stockholder release to the company.
Wells Fargo is providing an $84 million debtor-in-possession financing facility, and upon exit from bankruptcy Perfumania will be a privately held company.