Share this article

Off-price designer fashion and furnishings retailer Loehmann’s Capital Corp today (15 November) filed for Chapter 11 bankruptcy protection in a move that will allow it to reduce its debt and recapitalise its balance sheet.

Loehmann’s said it has agreed the plan with its owner Istithmar World, the Dubai-based private equity house, and Whippoorwill Associates Inc, the agent for its discretionary funds and accounts, which represents around 70% of its senior secured notes.

The voluntary ‘pre-negotiated’ proceedings have begun in the US Bankruptcy Court for the Southern District of New York. The retailer says it will emerge with have sufficient liquidity and the financial flexibility to fund daily operations without interruption, including payments to essential vendors, customers and employees.

Under the plans, Series A noteholders will receive 42.4% of the reorganised equity, Series B holders will receive 8.6%, and new investors will receive 49.1%, all on a fully converted basis.

Istithmar World and Whippoorwill have also agreed to invest $25m in the company when it emerges from Chapter 11.

Loehmann’s existing lender, Crystal Financial, has also committed to provide a $45m debtor-in-possession financing facility.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData

The department store retailer, which has 45 stores, was bought by Istithmar for $300m in July 2006. It expects to emerge from Chapter 11 during the first quarter of 2011. It has blamed falling sales and high levels of debt for today’s action.

Subscribe to Just Style

Join over 70,000 apparel industry professionals by unlocking full access for just £1 (plus VAT if applicable)

Already a Member? Login here

Just Style membership gives you:

  • Unlimited access to Just Style content including in-depth analysis, exclusive blogs, industry executive interviews and management briefings
  • Unbeatable market coverage from apparel sourcing and supply chain issues, to emerging markets and manufacturing
  • Unrivalled apparel industry comment from journalists including Leonie Barrie, Michelle Russell, Hannah Abdulla and Beth Wright.
Want multi-user access? Explore our multi-user & corporate memberships

70% of the apparel and textile companies in the Forbes Global 2000 use Just Style

Find out more