Chapter 11 Bankruptcy for Eddie Bauer Holdings, Inc.

June 19, 2009 · Posted by Alex

From CNN.com:

“Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection Wednesday, citing an inability to pay back debt.

Eddie Bauer (EBHI) emerged from Chapter 11 bankruptcy in 2005 after being spun off from former owner Spiegel Catalog, which itself sought bankruptcy protection in 2003.

Costs from the 2005 reorganization, combined with pressure from the current recession, left the company ‘with no choice but to use this process to reduce the debt load,/ said chief executive Neil Fiske in a prepared statement.’”

Eddie Bauer has 371 stores nationwide, including in Orange County (notably, in Costa Mesa’s South Coast Plaza), and plans to keep most of the stores open during the bankruptcy process.  If a new buyer takes over, however, it’s unclear what effect that would have on store closings.

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Bankruptcy Protection Sought By Another Orange County Retailer

March 16, 2009 · Posted by Alex

From the OC Register online:

“Retail chain Everything But Water recently filed for Chapter 11 bankruptcy protection, according to a court document.

The chain has Everything But Water stores at Brea Mall, South Coast Plaza and The Shops at Mission Viejo, according to its Web site.

The company wants to close 10 stores; none of those are in Orange County, according to a court document.

During the period from late September to December 2008, the company experienced a more than 23 percent decrease in gross sales compared to the same period in 2007. Still, the company showed a profit for 2008. But recognizing that no end to the economic crisis was in sight, the company began efforts to reduce expenses and streamline operations as early Sept. 15, 2008. The company has been operating at a net loss in 2009, according to a court document.

The company is also attempting to sell the business as a going concern in Chapter 11, according to a court document.

Everything But Water has been a retailer of women’s swimwear, resort wear and accessories for 25 years. In October of 2006, Everything But Water acquired the assets of another retailer in the same line of business, Water Water Everywhere, and in February of 2007, Everything But Water acquired the stock of Just Add Water, effectively doubling the size of the business’ retail operations.

The Florida-based company has 70 stores in malls and strip malls in 26 states and Puerto Rico.

In April of 2006, Everything But Water was acquired by Bear Growth Capital Partners, an affiliate of Bear Stearns Merchant Banking, which is now a part of J.P. Morgan Chase Bank.”

Both Chapter 11 bankruptcies and Chapter 7 bankruptcies have seen a marked increase in Orange County this year, according to the bankruptcy attorneys at Curtis Law Group, a bankruptcy law firm with Orange County offices in Irvine, Mission Viejo, and Fullerton.

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Are Gift Cards Safe from Bankruptcy? Think Again.

November 11, 2008 · Posted by Dr. Grey

Have you ever thought what to do with a “toxic” gift card? You know, those gift cards from companies that could go bankrupt?

Lots of people see gift cards as the perfect present, but what if those gift cards belong to the troubled retailers that faced closings in 2008? It’s estimated that more than $75 million from store and restaurant gift cards could be lost this year.  For Orange County residents, home to South Coast Plaza in Costa Mesa, the Mission Viejo Mall, Laguna Hills mall, and many other shopping centers, this is something to be worried about.

Last Christmas, shoppers spent approximately $26.3 millions on gift cards at retailers. Big retailers, such as Sharper Image, Bombay Co. and most recently Circuit City, have filed for bankruptcy protection. The Bankruptcy Code considers unused gift cards as unsecured debt, which means that the company would not be forced to honor them, no matter if the amount goes to $20 million as in Sharper’s case.

Although Sharper Image first decided not to honor the gift cards, the company later proposed to accept them if the clients spent twice the value of the gift card on a single transaction. So, in order to get your Christmas present from Grandma, you would need to spend twice its value. Talking about not-so-good deals.

In cases in which a company is sold or reorganized, and continues its operations, most owners will get authority from the Bankruptcy Court to honor the cards, but in outright liquidations, in which stores are closed, the cards would be worthless. In that case, you could use your long expected gift card as a ruler, or as a chewing gum scratching tool.

What are you going to give your picky relatives this Holiday season? In case of doubt, just remember that good old cash never expires and it’s always well received.

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