Delaware Business Bankruptcy Report: Morris James LLP Lawyers and Attorneys

Yesterday, June 9, 2008, Goody’s Family Clothing, Inc. and 19 of its subsidiaries and affiliates sought bankruptcy protection in the United States Bankruptcy Court for the District of Delaware.  The case is being administered under case number 08-11133. 

According to the affidavit filed in support of the bankruptcy petitions and related first-day motions, Goody’s is a privately held Tennessee corporation owned by a Delaware entity, Goody’s Holdings, Inc., a non-debtor.  The debtors operate specialty stores that sell clothes, shoes, accessories and gift items.  In addition to website operations, the debtors operate 355 specialty stores throughout the southern and central United States.

According to the affidavit, events leading to the bankruptcy filing include operational losses, tightening of the credit markets, strain on merchandise flow and underperforming stores in the chain.  Prior to the bankruptcy filing, Goody’s closed 18 stores, and, according to the affidavit, the debtors plan to close an additional 69 stores.

The affidavit indicates that the debtors began discussions with their major trade creditors prior to the filing to gather support for a plan of reorganization that the debtors expect to file within the first month of these cases.

The Honorable Christopher S. Sontchi has been assigned to the cases.

• Email This
• Print
• Comments
• Trackbacks

Home furnishings retail giant Linens 'n Thing has filed a Chapter 11 petition in the United States  Bankruptcy Court for the District of Delaware, where the Honorable Christopher S. Sontchi is presiding over the cases.  Linens 'n Things operated 589 retail stores in the United States and Canada.

According to the affidavit that the debtors' Chief Financial Officer filed in support of their first day motions, a number of external factors led to a steep decline in the debtors' profitability and liquidity that has prevented the debtors from continuing their plans to turn around the retailer.  The chief factors cited were the decline in the housing market and tightening of credit markets that have led to a decline of discretionary spending in the housewares and home furnishing sector.

The cases comprise thirteen (13) debtors with approximately 120,000 creditors.  The debtors have sought permission to pay pre-petition wages and benefits to their approximately 15,900 U.S. employees.

Rampant Internet-based rumors in recent months urged customers to use gift cards from Linens 'n Things amid speculation that the chain would declare bankruptcy.  However, the debtors sought permission from the Court to honor gift card and certain other customer obligations in the ordinary course.  The Court has approved this request.

• Email This
• Print
• Comments
• Trackbacks

Spyrus Inc. and two subsidiaries - Terisa Systems Inc. and Blue Money Software Inc. - sought Chapter 11 protection Monday in the United States Bankruptcy Court for the District of Delaware.  Spyrus develops and sells software and other products for the electronic information security market.

The debtors are proposing DIP financing of $2 million to be obtained from John Miller, a current investor in the debtors, in exchange for a corresponding equity interest in the reorganized debtors.  The debtors are requesting that the Court set a hearing to approve a pre-packaged plan of reorganization.

The Honorable Christopher S. Sontchi has scheduled a hearing on the debtors' first day motions for today, Wednesday, March 12, 2008, at noon at the United States Bankruptcy Court in Wilmington, Delaware.

• Email This
• Print
• Comments
• Trackbacks