Following the demises of Daffy’s, Filene’s Basement and Syms, Loehmann’s filed for Chapter 11 late Sunday.
In its bankruptcy petition, Loehmann’s said it had between $50 million and $100 million in assets, and between $100 million and $500 million in liabilities.
According to filings in the U.S. Bankruptcy Court, Loehmann’s attempted to sell itself last month but none of the 39 prospective buyers who reviewed its book made a “meaningful” offer.
‘Increased Competition’ in Off-Price
Loehmann’s board of directors voted to pursue “a wind-down and liquidation process” in which the company will seek to sell its assets at a Dec. 30 auction, a filing shows. Experts in retail liquidations, SB Capital Group, Tiger Capital Group and A&G Realty Partners, agreed to make an initial bid that includes $19 million in cash and other sums, according to the filings.
Loehmann’s Chairman Michael Appel said “increased competition in the off-price retail channel, coupled with limited access to capital, has severely impacted the company’s financial position” resulting in the filing.
The company said it will remain “business as usual.”
Founded in 1921 by Frieda Loehmann in Brooklyn, Loehmann’s has 39 stores in 11 states and Washington.
Noting closures of other small off-price chains, Howard Davidowitz, retail consultant at consultant at Davidowitz & Associates, told Reuters that “the message is that everyone of this size in the off-price business did not have the critical mass to compete.”
To be successful off-price retailers have to show the comparison between themselves and regular retailers. “But if regular stores are selling products at the same or lower prices, they’re done. We are in the most promotional holiday season in 20 years. That’s what Loehmann’s ran into, and that’s why they filed now,” Davidowitz said.
Loehmanns previously filed for bankruptcy protection in May 1999 and emerged from Chapter 11 in February 2011 primarily owned by Whippoorwill Associates.