Fortunoff Enters 'Chapter 22'
James Mammarella -- Home Textiles Today, February 9, 2009
Upscale jewelry and home furnishings specialty retailer Fortunoff last week filed for Chapter 11 bankruptcy protection – exactly one year and one day after its first Chapter 11, on Feb. 4, 2008.
Last year's bankruptcy was a “pre-packaged” deal, whereby investment firm NRDC Equity cleaned up Fortunoff's books and bought it out of bankruptcy in March 2008 – looking to expand Fortunoff's format beyond its existing retail base by opening new outdoor-furniture stores as well as new, Fortunoff-branded home and jewelry departments in Lord & Taylor, another NRDC property. In fact, Lord & Taylor at that time proffered a $10 million letter of credit “in conjunction with Fortunoff's bankruptcy filing” NRDC said.
The Feb. 5, 2009 filing, by Fortunoff Holdings, LLC and Fortunoff Card Co., LLC in the U.S. Bankruptcy Court, Southern District of New York, listed one major home textiles supplier among the 30 largest unsecured creditors: Croscill Curtain Co., ranked No.13 with an estimated claim of $477,950.
In court documents, Fortunoff said funds will be available for distribution to unsecured creditors. It stated assets at $154.7 million and liabilities at $139.4 million. It listed but a single secured creditor: its chief lender, Wells Fargo, owed $68.0 million.
The filing states Fortunoff “incurred net operating losses of approximately $42.2 million on revenues of approximately $260.1 million” in the nine months ending Nov. 30, 2008. Fortunoff cites a “severe liquidity crisis that began in January 2009,” with vendors tightening up on credit.
The documents also state that Fortunoff, along with Wells Fargo “as agent for the pre-petition lenders” and its financial advisor Zolfo Cooper, LLC, “began a full and robust marketing of their business” around the end of 2008. The filing goes on to state that Fortunoff has in recent weeks met with “numerous potential buyers, investors and partners” – but that the company lacks the “necessary liquidity to continue to operate outside of bankruptcy.”
Fortunoff, with about 1,780 employees, also petitioned for approval of debtor-in-possession financing by a Wells Fargo-led group.
If not successful in finding a buyer, Fortunoff stated, then it will seek to wind down and liquidate the business.
Fortunoff president and ceo Charles Chinni said in a company press release: “The jewelry and home goods businesses have been hit particularly hard by the economic downturn. However, we are actively seeking a buyer for the business, and we will continue to do so in the Chapter 11 process.”
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