News - Service Merchandise Co. (NYSE:SME) Files Chapter 11
<<Service to File Chapter 11
Catalog Retailer Acts After Vendors File Involuntary Reorganization Petition
March 16, 1999: 11:53 a.m. ET
Retailer to Shut 134 stores - Feb. 9, 1999
Retailer Cutting 3,300 jobs - March 27, 1997
Service Merchandise
NEW YORK (CNNfn) - Service Merchandise Co., the financially beleaguered catalog store operator, said Tuesday its board has approved the filing of a voluntary petition for Chapter 11 bankruptcy protection after five vendors filed an involuntary reorganization petition Monday night.
Nashville, Tenn.-based Service Merchandise said it expects to operate its stores despite the filing of the involuntary proceeding in the U.S. Bankruptcy Court for the Middle District of Tennessee, unless ordered not to do so by the court.
"Our stores will be open for business as usual," said Bettina Whyte, the company's chief executive officer. "We intend to operate our businesses vigorously and to meet our customers' needs."
Whyte also said employees will continue to be paid, shipments will be paid for, and policies regarding exchanges, returns and gift certificates will remain unchanged.
Service Merchandise also said the administrative agent for its revolving credit facility, Citicorp U.S.A., is preparing a waiver to permit the company to continue borrowing despite the involuntary filing. The agreement would be effective following approval of the requisite number of banks in the credit facility.
Whyte said the facility has about $50 million in credit available.
Service Merchandise said the vendors filing the petition are not members of a committee formed in connection with the company's out-of-court reorganization activities. According to the filing, the vendors are American Glass Inc., Remington Products Inc., Samsonite Corp., ToyBiz Division of Marvel Enterprises and Designer Automation Products.
The company said the voluntary filing will be made as soon as practicable, most likely in late March. It said the filing will be done to "maximize the value of the business for all of the company's stakeholders and to avoid the uncertainties of protracted litigation over the involuntary filing."
Service Merchandise (SME) has been battling financial difficulties for several years. Last month, it announced that it would close 134 underperforming stores in order to concentrate on 213 others and to refine its niche in jewelry, gifts and home products.
Service Merchandise shares closed Monday at 7/16, down 1/16.>> |
