NEW YORK — Three of Clothestime Stores Inc.’s vendors have hauled the discount juniors’ specialty retailer back into a California bankruptcy court.
The three suppliers — Ms. Bubbles Inc., Rigo International Inc. and Big Six Fashions Inc. — filed their involuntary Chapter 7 liquidation petition on Friday in a U.S. bankruptcy court in Santa Ana. The filing comes less than six years after the retailer exited its first tour of bankruptcy proceedings.
According to the petition, the debtors said they are owed a total of $704,195.
The actual amount of debt held by Clothestime is undetermined, owing to the specialty chain’s status as a private firm since February, when it was acquired by JM Associates here for an undisclosed sum.
Clothestime might yet undergo another ownership change. The chain has until about the end of the month to contest the involuntary petition. Sometimes such an action by vendors can open the door for a sale of the company, particularly if there are additional debts that remain unpaid. It is one option Clothestime’s new owner could consider, instead of an outright liquidation. Officials at Clothestime and JM Associates couldn’t be reached for comment.
Another option that can’t be ruled out is a conversion of the Chapter 7 petition to a Chapter 11, which would give Clothestime a chance to restructure.
As reported, Clothestime filed for Chapter 11 back in 1995. A year earlier, before all the debts piled up, the retailer was considered a powerhouse, trading on the Nasdaq with more than 500 stores and $350 million in sales annually. Two years after its filing, it exited Chapter 11.
Now doing about $150 million annually, the chain has been reduced to about 225 locations, with 90 in California. It is still based in Anaheim, Calif., with locations in strip centers. Clothestime’s challenge is figuring out how to get more foot traffic from better-known competitors, such as American Eagle Outfitters and Pacific Sunwear, which operate in the regional malls where teens are more likely to congregate.