Eddie Bauer has filed for chapter 7 bankruptcy protection

Overwhelmed by debt payments and a steep drop in customer spending, Seattle-based Eddie Bauer has filed for chapter 7 bankruptcy protection. Eddie Bauer Holdings Inc. has struck a deal to be bought by a private equity firm for $202 million with an agreement to keep most of the retailer’s stores open and employees on the payroll. The new agreement is with New York–based private equity firm CCMP Capital Advisors LLC, which intends to operate the business as a going concern with small or no long-term debt. CCMP Capital has agreed to keep most of the 371 stores open and retain most of the employees, according to Eddie Bauer.

CCMP Capital specializes in buyouts and looks for investment opportunities in retail and other sectors. Eddie Bauer said it hopes to operate business as usual during bankruptcy court proceedings and has questioned for court approval to continue paying vendors and workers. The company also said it intends to honor customer gift cards, returns and loyalty program points.The company also announced that it has secured a commitment from its existing revolving credit lenders, Bank of America, N.A., GE Capital Corp. and CIT Group/Business Credit, Inc. for so-called debtor-in-possession (DIP) financing of $90 million on an interim basis and $100 million based on the final court order. The go, the company said, should provide it with ample cash flow to continue paying its bills. According to its bankruptcy filing with the U.S. Securities and Exchange Commission, Eddie Bauer Holdings Inc. had total assets of $525.22 million in April. The company listed total liabilities of $448.9 million.

Eddie Bauer said that combined comparable store sales — a barometer of success at the store level — fell 11.3 percent for the first quarter, a decline the company blamed on the recession and reduced retail spending. Sales were down nearly 15 percent in Eddie Bauer’s retail stores, and sales through its direct channel were down nearly 11 percent. The outlet stores saw sales decline by nearly 76 percent. Eddie Bauer has 370 stores, including 251 retail stores and 119 outlet stores in the United States and Canada.

SOURCE: http://staringfrog.com/legalnews/2010/07/eddie-bauer-bankruptcy/