COURT APPROVES CLOTHESTIME CHAPTER 11 PLAN
NEW YORK — A bankruptcy court in Santa Ana, Calif., last Wednesday confirmed the reorganization plan of Clothestime Inc., the off-price junior apparel chain.
The plan calls for unsecured creditors to receive 7 cents on the dollar in cash, plus $4.6 million in notes secured by 30 percent of the equity in the reorganized company.
Clothestime’s existing stock has been canceled, and the chain, based in Anaheim, Calif., will become a private company when it exits Chapter 11. It has been in bankruptcy proceedings since December 1995.
David Sejpal, chairman, president and chief executive officer, said the 264-unit off-pricer plans a gradual expansion in its existing markets, primarily California, Texas and Florida.
Sejpal said Clothestime’s stores have become “much more fashion-driven than ever” during bankruptcy proceedings, with greater differentiation between departments. The stores now feature specific sections for such themes as animal prints, ski sweaters and love-inspired merchandise rather than “off-price things just thrown together, as in the past,” the ceo noted.
Sejpal, formerly vice president and chief financial officer, became ceo after the resignation last January of John Ortega 2nd, former chairman and ceo, and co-founder of the firm. The court rejected an attempt by Ortega to regain control of the firm.