GANTOS LIQUIDATING ITS STORES
Byline: Vicki M. Young
NEW YORK — Going-out-of-business sales have begun at the 114 mall-based stores of bankrupt retailer Gantos Inc. and are expected to continue for eight weeks.
Gantos filed for Chapter 11 bankruptcy court protection on Dec. 28, 1999. As reported earlier, Gantos said in a Securities and Exchange Commission filing that it was in dire need of cash and had almost no trade credit.
The stores are located in 24 states throughout the West, Midwest and Northeast regions.
Founded in 1952, the troubled specialty retailer sold upscale private label and name brand apparel targeting women between ages 30 and 50.
After emerging from an earlier bankruptcy in March 1995, the retailer had remained unprofitable since 1996.
In the last two years, Gantos has struggled to gain trade support, and its stores often have been short of merchandise. An attempt to ease its credit crunch through a 1998 merger with off-price chain Hit or Miss fell through.
Kahn Consulting Inc. received bankruptcy court approval earlier this month to direct the winding down of operations. Senior officers and most of the company’s board have already resigned.
Gordon Bros. Retail Partners and the Ozer Group are conducting the sales.
The retailer, based in Stamford, Conn., had defaulted on certain covenants of a loan agreement with Foothill Capital Corp. and Paragon Capital prior to its Chapter 11 filing. The SEC filing last year said Gantos owed noteholders at least $3.9 million.
In recent months, Gantos had been instructing factors to apply cash balances to outstanding amounts due. As of Dec. 13, the company had $10.1 million in past-due payables.
For the quarter ended on Oct. 30, Gantos reported a $4.4 million net loss against a $4 million net loss in the prior year period. Sales dropped 5.3 percent to $33.6 million in the quarter, while same store-sales slumped 5.2 percent.