Wednesday, June 17, 2009

Eddie Bauer Files For Bankruptcy

Eddie Bauer, which emerged from bankruptcy as a standalone company in 2005 after former owner Spiegel had filed for chapter 11 protection, has just filed for bankruptcy again, the latest casualty of the real "green shoots free" consumer "spending" landscape.

Clothing retailer Eddie Bauer Holdings Inc. filed on Wednesday for Chapter 11 bankruptcy court protection, the latest retail casualty of the recession.

It said CCMP Capital Advisors LLC has bid for its assets. Other buyers may also make bids while the company is under court protection.

The company said in its filing that it is seeking court protection because its financial position was creating uncertainty among vendors that supply its inventory and because its cash flow problems "could severely impede" its operations.

Eddie Bauer said it might not be able to comply with some covenants in its $225 million senior debt or have the cash under its line of credit to make vendor payments in the future.

Eddie Bauer considered refinancing of all or some of its debt, and it considered a reorganization, sale or liquidation through Chapter 11 bankruptcy protection, as well as continued operation on a modified business plan. It now hopes to be sold.

The outdoorsy clothing retailer had $476.1 million in assets and $426.7 million in debt at the time of the filing Wednesday with the United States Bankruptcy Court of the District of Delaware.

Bankruptcy rumors had been swirling as Bellevue, Wash.-based Eddie Bauer struggled with slumping sales amid the recession. It reported a loss for the first quarter of $44.5 million.

Eddie Bauer joins Circuit City, Linens 'N Things, Mervyns and other retail chains that have filed for bankruptcy court protection as consumer spending fell and the recession continued.

Peter J. Solomon Co. has been named financial adviser for the company and Alvarez & Marsal was named restructuring adviser.

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