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Spiegel drops the other shoe

Downers Grove, IL — After repeated warnings in recent weeks that it would soon become insolvent, The Spiegel Group voluntarily filed Chapter 11 today and announced it has secured $400 million in senior secured debtor-in-possession financing facility to supplement its cash flow during the reorganization process.

Late last week, the chief executives of two Spiegel units resigned: Melissa Payner, who had been president and ceo of Spiegel catalog, and George Ittner, who had been chairman and ceo of Newport News. They will be replaced by Geralynn Madonna, a 21-year Spiegel vet who most recently was president and coo of Newport News.

Banc of America Securities LLC arranged the DIP financing from Bank of America, N.A., Fleet Retail Finance, and the CIT Group/Business Credit. The company expects to tap $150 million of the funding once the bankruptcy court approvies an interim financing order.

The filing came less than a week after the company announced that its private label credit card is no longer accepted at any of its businesses — Eddie Bauer, Spiegel catalog or Newport News. At the beginning of the month, William Kosturos was appointed interim ceo and chief restructuring officer, after Martin Zaepfel retired as vice chairman, president, and ceo.

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