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Chargebacks add a final insult to P'tex demise

Wilmington, DE — With only days remaining before the sale closing that will effectively liquidate Pillowtex, Target Corp. and its three principal retail businesses have filed court papers seeking nearly $2.5 million in chargebacks against the defunct mill.

The action, filed with the U.S. Bankruptcy Court for the District of Delaware this week, seeks "precautionary relief" to offset the charges against the remaining accounts payable by Target to Pillowtex — an amount totaling about $1.8 million, according to the filing. The chargebacks are being sought by Target Stores, Marshall Field's and Mervyn's.

If the court recognizes the charges during its scheduled Nov. 7 hearing, that might conceivably result in Pillowtex owing Target approximately $700,000. The filing states that Target Corp. and Mervyn's are suffering "considerable hardships" because of Pillowtex's "unscheduled" bankruptcy and liquidation.

"Mervyn's will be forced to significantly mark down the home goods to provide an incentive to their guests to purchase the home goods particularly where current inventory is incomplete," the filing stated.

Substantially all of Pillowtex's assets were auctioned off to GGST LLC for $128 million earlier this month. Target Brands was among the unsuccessful bidders for parts of Pillowtex in that auction. The GGST sale is scheduled to close no later than Nov. 6.

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