JAY JACOBS FILES CH. 11, PLANS TO LIQUIDATE ASSETS

SEATTLE — Jay Jacobs, the Seattle-based apparel retailer, filed for Chapter 11 Friday and plans to liquidate its assets.
The retailer, which emerged from an earlier bankruptcy in 1997, said it will conduct a storewide inventory liquidation, following which it expects that the leases for its 114 stores in 22 states will be rejected or assigned, and the store employees will be laid off. Jay Jacobs listed assets of $20 million and liabilities of $28 million, according to the office of its bankruptcy counsel, Preston Gates & Ellis, Seattle.
The retailer said it has negotiated financing with its principal prepetition lender, Finova Capital, for aspects of the liquidation. In addition, Jay Jacobs said it has asked bankruptcy court to reject its employment agreement with Rex Loren Steffey, president and chief executive officer, since his “services will not be required in a liquidation scenario,” the company said in a statement.
As reported, the chain said in late July it was in default of certain terms of its working capital facility, and said it had been unsuccessful raising funds to alleviate liquidity problems. In late August, the chain laid off 54 employees at its corporate headquarters and distribution center. Its counsel said it has 700 employees.
Jay Jacobs, which was founded in 1941, targets men and women in the 18-to-34 age range and offers moderate prices and contemporary looks. Most of the merchandise is sold under the company label. The company operated about 300 stores by the late 1980s. It found it was overextended and filed a Chapter 11 petition in May 1994. The bankruptcy case was closed in June 1997; however, the company has continued to face declining sales, store closures and a shortage of capital.