WASHINGTON — Woodward & Lothrop said in a statement Thursday that it has heard reports of an impending Chapter 11 filing before, but the company did not deny the possibility it was about to make such a filing.
As reported here Thursday, W&L was said to have lost funding from its parent company, Taubman Holdings, and has lined up debtor-in-possession financing as a prelude to a bankruptcy filing.
“The speculation and rumors regarding the possibility that Woodward & Lothrop may file for bankruptcy are nothing new,” the company said in the statement. “We’ve heard them every January for the last several years.”
The department store chain is also reportedly slow in paying its bills due to the requirements of its $135 million credit line from Chemical Bank. “Our current payment patterns are consistent with January payment patterns of the past several years,” the W&L statement added. “The paydown portion of our credit line with Chemical Bank is something that has occurred every year.
“We do have a highly leveraged balance sheet, resulting primarily from past acquisition costs. Nevertheless, our business is healthy; each of the stores operates at a profitable level. We had a good Christmas, with comparable-store sales up 2 percent over last year.”
The statement concluded: “As to recapitalizing the company — which has been a goal for some time — we have explored many options during the past several years, including refinancing. Chapter 11 has always been an option open to us, as it is to any company confronted with similar financial issues. The company continues to consider all its alternatives.” W&L operates 19 Woodward & Lothrop units in the Washington-Baltimore area and 16 John Wanamaker stores, mainly in the Philadelphia area.