Pillowtex officially in Chapter 11, cuts deal with liquidator
July 31, 2003-- Home Textiles Today,
Kannapolis, NC — Only hours after shutting down all of its manufacturing plants and firing 6,450 workers today, Pillowtex Corp., out of cash and out of time, filed for Chapter 11 bankruptcy protection for the second time in three years and only 14 months after emerging from its first bankruptcy.
And acting fast to wind down operations and wipe the slate clean of all but the company's brands, the nation's third-largest home fashions producer said it cut a deal to sell off most of its assets — brands, most of its plants and equipment — to a newly formed company, GGST LLC, for an unspecified sum. At the same time, the virtually defunct Pillowtex asked a Wilmington, DE, bankruptcy court to establish bidding procedures allowing other potential buyers to join in an auction for what remains of the textiles giant.
GGST, the acquisition vehicle, is a company formed by SB Capital Group, a financial company with a long history of asset appraisal and operating liquidations; Gibbs International; Gordon Brothers Retail Partners; and Tiger Capital Group.
SB Capital's client roster reads like a who's who of failed retail giants, including Alexander's, Ames, B. Altman, Best Products, Bradlees, Caldor, Channel Home Center, Crowley Milner, Montgomery Ward, F.W. Woolworth, Gimbels, Hechingers Hecks, Hess, Hills, Homeplace/Waccamaw, Jamesway, Lechmere, The Wiz and Service Merchandise.
While winding down in bankruptcy, Pillowtex said it will not operate it plants, now already darkened, but will continue to ship available inventory to existing accounts. At the same time, the company will hold going-out-of-business sales at its chain of retail stores.
The mill said its advisors estimate that the auction period for Pillowtex assets will last about 45 days, and Pillowtex directors and managers will review any competing offers.
"If no acceptable offers are received prior to the expiration of the bidding period," and if the deal is green-lighted by the bankruptcy court, the company said, the deal with GGST becomes final.
In a related move, Group 3 Design, a brand management company, has been retained "to manage the branded licensing activities of the acquired brands." It is widely expected that GGST will hold on to the various Pillowtex brands — including Royal Velvet, Charisma, and Cannon — and license them out to suppliers or retailers. Inquiries about licensing the brands should be made to email@example.com
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