Bakers Footwear Group Inc. (BKRS:US), a mall- based retailer of shoes for young women, filed for bankruptcy protection after announcing a plan to close stores and reduce costs because of declining sales.
The company listed assets of $41.9 million and debt of $59.5 million as of April 28 in Chapter 11 documents filed today in U.S. Bankruptcy Court in St. Louis. Chapter 11 is the section of the U.S. Bankruptcy Code used by companies to reorganize.
Bakers, based in St. Louis, said Aug. 27 that it will shut as many as 25 stores, sell leases and other assets for as many as 52 more to Aldo Inc. for $6.4 million, and terminate its license for H by Halston. The proceeds will be used to pay bank debt (BKRS:US) and trade creditors, Bakers said. The company expects to raise as much as $8 million through liquidation sales and reduce expenses by as much as $7 million a year.
“The plan will streamline the company’s operations to focus solely on its Bakers brand,” according to the August statement. Bakers sells private-label and national-brand shoes, boots, sandals and accessories at 218 stores in the U.S.
Bakers is asking the court to approve as much as $22 million in debtor-in-possession financing from Crystal Financial LLC, including $6 million on an interim basis, to operate while in bankruptcy, according to court papers. Pursuant to the terms of the credit agreement, Bakers must, on or before Nov. 2, enter into “a definitive term sheet or similar agreement” with respect to reorganization plan and disclosure statement.
The company delayed filing its financial report for the fiscal quarter ended July 28. Sales in the period fell 11 percent from a year earlier, with same-store sales dropping 7.5 percent, Bakers said in a September filing with the U.S. Securities and Exchange Commission.
Baker’s largest unsecured creditors include Taichung, Taiwan-based East Mount Shoes Ltd., with a claim of $6.9 million; Steven Madden Ltd. (SHOO:US), based in Long Island City, New York, with a claim of $3.7 million; and H Co. IP LLC, based in Los Angeles, with a claim of $2.5 million.
Bakers fell 87 percent to 6 cents in over-the-counter trading in New York today.
The case is In re Bakers Footwear Group Inc., 12-49658, U.S. Bankruptcy Court, Eastern District of Missouri (St. Louis).
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