US: Mervyns files for Chapter 11 bankruptcy protection
Beleaguered department store chain Mervyns has filed for bankruptcy protection as executives struggle to reinvigorate the cash-strapped retailer.
The company confirmed that it had filed voluntary petitions for relief under Chapter 11 of the US Bankruptcy Code, thus enabling it to restructure its debt and realign its operations.
Mervyns said it had already received a commitment for a US$465m debtor-in-possession facility from a lender group led by Wachovia Capital Finance Corporation (Western) as an agent.
Once approved by the Bankruptcy Court, the funding, plus general cashflow, will be used to fund Mervyns' ongoing operations.
The company will also seek court approval to continue paying its workers' wages and provide employee benefits.
"Mervyns needs to reorganise its finances and operations due to the state of the economy and difficult operating environment for our industry," said John Goodman, company CEO.
"After careful consideration of available alternatives, the company's management board determined that a Chapter 11 filing was a necessary and prudent step that allows us to operate our business without interruption as we seek to restructure our debt and other obligations in a controlled, court-supervised environment."
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