US: Bernard Chaus defaults on CIT credit facility
Women's wear maker Bernard Chaus Inc has told the Securities and Exchange Commission its ability to operate as a going concern is at risk after defaulting on its financial covenants with The CIT Group.
The CIT Group is the sole source of funding for the company's operations, and will continue to provide funding at its discretion, according to a Form 10-Q filing covering the quarter to 31 December 2009.
However, Bernard Chaus warns that unless it can amend its credit agreement with CIT, or find alternative financing, it will not have sufficient cash flow from operations to meet its liquidity needs.
"This will have a material adverse affect on its business, results of operations, liquidity and financial condition, and its ability to operate as a going concern," the filing said.
The company, whose brands include Josephine Chaus, Josephine, Josephine Studio, Chaus, Cynthia Steffe, and Cynthia Cynthia Steffe, also makes private label apparel.
The filing also noted that gross profit for the three months to 31 December fell 16% to $4.7m as revenues tumbled 18.8% to $21.1m.
For the six-month period, gross profit slumped 28.2% to $11.2m on a 25.2% drop in sales to $44.8m.
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