Posted by: thepinetree on 07/30/2008 12:28 PM
Updated by: thepinetree on 07/30/2008 12:28 PM
Expires: 01/01/2013 12:00 AM
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Mervyns Files for Bankruptcy
Hayward, CA... Mervyns, the leading mid-tier department store chain in California and the Southwest, today announced that it and certain of its affiliates filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to restructure the Company’s debt and re-align its business operations. The Company intends to work with its constituencies to execute its reorganization through Chapter 11. Mervyns stores will remain open and business will continue as the Company moves through the bankruptcy process....
“Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry,” said John Goodman, Chief Executive Officer of Mervyns. “After careful consideration of available alternatives, the Company’s Management Board determined that a Chapter 11 filing was a necessary and prudent step that allows us to operate our business without interruption as we seek to restructure our debt and other obligations in a controlled, court-supervised environment. We are committed to serving our customers and maintaining regular operations as we undertake this reorganization.”
In conjunction with the filing, the Company has received a commitment for a $465 million debtor-inpossession (DIP) facility from a lender group led by Wachovia Capital Finance Corporation (Western) as agent. Upon Bankruptcy Court approval, the financing, combined with operating cash flow, will be used to fund the Company’s ongoing operations.
Mervyns will seek the Bankruptcy Court’s approval for additional authorizations, including permission to continue paying employee wages and salaries and to provide employee benefits without interruption, among others. During the Chapter 11 process, vendors should expect to be paid for post-petition purchases of goods and services in the ordinary course of business. The Company has also asked for Bankruptcy Court permission to continue to honor its current customer policies regarding merchandise returns and outstanding gift cards and customer loyalty programs, so that the Chapter 11 process will not impact the Company’s customers.
Goodman continued, “The decisive action we are taking provides the Company with the most effective means to restructure our operations, strengthen our balance sheet and position Mervyns to compete more effectively. I want to thank our customers and vendors for their continued support during this process. We are pleased that, as we seek to restructure, we can continue to satisfy our customers’ expectations by offering style, quality and excellent service – all at great prices. In addition, we are grateful to all of our associates for their hard work, loyalty and dedication. Our management team is committed to making this financial restructuring successful and leading Mervyns toward a bright future.”
Mervyn’s LLC (which operates the Mervyns business), together with Mervyn’s Holdings, LLC (parent of Mervyn’s LLC) and Mervyn’s Brands, LLC (subsidiary of Mervyn’s LLC), filed voluntary Chapter 11petitions in the United States Bankruptcy Court for the District of Delaware. The main case has been assigned case number 08-11586 Additional information about the Mervyns restructuring is available at the Company’s Web site, www.mervyns.com, or via the Company’s restructuring information line, 888-251-2679. For access to Court documents and other general information about the Chapter 11 cases, please visit www.kccllc.net/mervyns.
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