CHERRY & WEBB FILES FOR CHAP. 11
Byline: Vicki M. Young
NEW YORK — Distressed Cherry & Webb on Monday filed for Chapter 11 bankruptcy court protection in Manhattan, with the filing setting the stage for an orderly liquidation of the specialty retailer’s assets.
Irwin R. Gindi, president and chief executive officer of the 35-unit department store chain, said in a court affidavit filed with Monday’s petition that the company was planning to start its going-out-of-business sales on March 7. The GOB sale is expected to last 72 days. The chain’s store sites are spread across five New England states: Connecticut, New Hampshire, Massachusetts, Rhode Island and Vermont.
As first reported in WWD, an informal committee of C&W’s unsecured creditors had been formed in hopes of negotiating a resolution of the specialty retailer’s financial woes (WWD, January 31, 2000). According to a financial source, the retailer had not paid its vendors since November. The chain sells apparel and accessories targeting women between ages 15 and 50. Court papers indicated that total sales for the 11-month period ended Dec. 31, 1999, were $86.8 million, while the net loss was $2 million.
Gindi, a former owner of Century 21, acquired the chain in March 1999 when he bought Edward Finkelstein’s stake in the company. Finkelstein, who joined Cherry & Webb in February 1997, stepped down as chairman upon Gindi’s acquisition of the company. Finkelstein is the former chairman and chief executive officer of Macy’s and left shortly after the chain went bankrupt in 1992.
Gindi said in court papers that losses sustained in the summer and fall precipitated the credit crunch during the holiday period. Even the company’s sale of its credit card receivables portfolio in December for $15 million to Conseco Finance Corp. wasn’t enough to alleviate its financial constraints.
According to bankruptcy court records, the retailer’s largest unsecured trade vendors include Wisetex Trading Ltd., Kowloon, Hong Kong, $1.4 million; The Estee Lauder Cos., Melville, N.Y., $826,545; Jones Apparel Group, Bristol, Penn., $416,000; Liz Claiborne, North Bergen, N.J., $352,100; Calvin Klein Jeans (Warnaco), Milford, Conn., $331,000; Anne Klein, So. El Monte, Calif., $187,300, and The Ralph Lauren WW Co., Lyndhurst, N.J., $168,800. Other trade creditors include Lancome Paris, Kellwood Co., Esprit De Corp. and Miss Elaine Inc.
Top unsecured financial creditors include CIT Group/Commercial Services Inc., $1.1 million; Capital Factors, $262,100, and Finova Capital, $259,400.
The retailer’s corporate headquarters are at 1430 Broadway, but distribution, accounting and data-processing operations are based at a 150,000-square-foot facility in South Attleboro, Mass. The 35 store locations range between 6,500 and 30,000 square feet. Cherry & Webb has 950 employees, including 750 part-timers.
Members of the committee include The Estee Lauder Cos. Inc., Capital Factors, Republic Business Credit Corp., Kellwood, Liz Claiborne, Jones Apparel Group, Lancome Paris, Miss Elaine Inc., Polo Ralph Lauren and Finova Capital Corp.