Mon Dec 16, 2013 1:36pm EST
By Jonathan Stempel
NEW YORK Dec 16 (Reuters) - Loehmann's, the 92-year-old discount clothing chain, has filed for bankruptcy protection for a third time and said it is prepared to sell its assets to a group of liquidators.
The Chapter 11 filing late on Sunday makes the Bronx, New York-based company the latest retailer selling designer wear at steep discounts to succumb to competition from rival chains, joining onetime competitors such as Daffy's, Filene's Basement and Syms.
According to filings in the U.S. Bankruptcy Court in Manhattan, Loehmann's Holdings Inc. tried last month to sell its businesses as a going concern. But it got no meaningful bids from the 39 prospective buyers given access to its books.
Instead, Loehmann's board decided to pursue "a wind-down and liquidation process" in which the company will seek to sell its assets at a Dec. 30 auction, a filing shows.
SB Capital Group LLC, Tiger Capital Group LLC and A&G Realty Partners LLC, which have handled retailer liquidations, agreed to make an initial bid that includes $19 million in cash and other sums, a court filing shows.
In a statement, Loehmann's Chairman Michael Appel said "increased competition in the off-price retail channel, coupled with limited access to capital, has severely impacted the company's financial position," necessitating the filing.
Loehmann's also said Chief Executive Steven Newman, who had held that job since June 2011, has left the company, and that it will remain "business as usual" for shoppers in its stores.
Founded in 1921 by Frieda Loehmann in Brooklyn, New York, Loehmann's on Monday said it has 39 stores in 11 U.S. states and Washington, D.C. Rivals include Ross Stores Inc and TJX Cos, which operates TJ Maxx and Marshalls.
"The message is that everyone of this size in the off-price business did not have the critical mass to compete," said Howard Davidowitz, a retail consultant at Davidowitz & Associates in Manhattan, in a phone interview.
"The basis of their existence is to compare themselves to regular stores," he continued. "But if regular stores are selling products at the same or lower prices, they're done. We are in the most promotional holiday season in 20 years. That's what Loehmann's ran into, and that's why they filed now."
CASH DRAIN
Loehmann's emerged from Chapter 11 in February 2011 primarily owned by distressed debt specialist Whippoorwill Associates Inc. of White Plains, New York. Its prior owner was Dubai World Corp.'s Istithmar.
Whippoorwill was not immediately available for comment.
Loehmann's said it is "critical" that asset sales begin by Jan. 7, 2014, to staunch an "enormous cash drain" and allow it to quickly rid itself of winter apparel inventory.
Other failed retailers in recent years have included Borders Group Inc, Circuit City Stores Inc and Gottschalks Inc.
In its bankruptcy petition, Loehmann's said it had between $50 million and $100 million in assets, and between $100 million and $500 million in liabilities.
The company previously filed for bankruptcy protection in May 1999. Its latest case was assigned to U.S. Bankruptcy Judge Martin Glenn, who must approve asset sales. Canaccord Genuity Inc. is the company's investment banker.
The case is In re: Loehmann's Holdings Inc, U.S. Bankruptcy Court, Southern District of New York, No. 13-14050.
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