Monday, June 09, 2008
Goody's files for bankruptcy; Joplin, Pittsburg stores to close
Knoxville-based Goody' filed for Chapter 11 bankruptcy today and released a list of 69 "underperforming" stores it will close, including its store at 530 S. Rangeline in Joplin and its store in Pittsburg.
The release did not indicate any timetable for closing the stores. The news release reads:
Goody’s Family Clothing, Inc. (Goody’s), a moderately priced family apparel retailer operating in small to midsize markets primarily throughout the Southeast, today announced that it has filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company is focused on executing a comprehensive corporate
restructuring plan and will continue to operate the business without interruption during the reorganization process.
In conjunction with the filing, Goody’s is seeking and expects to receive approval for a variety of first day motions that will enable it to continue operating in a business as usual manner. The motions include requests to make wage and salary payments, continue various benefits and honor customer programs such as layaway services and gift cards. In addition, Goody’s has secured a commitment for $210 million in debtor-in-possession (DIP) financing to supplement its working capital and provide adequate liquidity while it works to reorganize the business. This financing includes $175 million in DIP financing under a revolving credit facility from General Electric Capital Corporation, $15 million in DIP financing under a term loan facility from GB Merchant Partners, LLC, and $20 million in DIP financing under a junior term loan facility from PGDYS Lending LLC. Goody’s decision to file for Chapter 11 follows an extensive review of alternatives to address pressures from tightening credit markets, strain on merchandise flow, and a sizable but isolated number of underperforming stores in the chain. A formal reorganization offers the most effective solution to overcoming these financial challenges and is in the long-term best interest of both Goody’s and its business partners.
Paul White, Goody’s recently appointed Chief Executive Officer, stated, “While Goody’s has a very successful 55-year heritage and we serve an important market niche, we have recently faced considerable challenges. After careful analysis, we made the decision to restructure the business through a Chapter 11 filing in order to streamline operations, refocus on our core business, and strengthen our balance sheet so that Goody’s is better positioned for the future. Having been in retail for over 30 years, I am excited by the potential at Goody’s and believe that by taking the right actions now, this business can move forward effectively. We plan to close 69 underperforming stores, consolidate our distribution centers by closing one facility in Russellville, Arkansas, significantly reduce expenses, and create a more appropriate capital
structure. In turn, we believe that a strengthened Goody’s will offer our vendors an excellent channel of distribution in desirable small to midsize markets and provide our customers with a greatly improved shopping experience based on appealing merchandise and strong customer service.
“The decision to close a large number of stores and further consolidate operations was a difficult one and we regret the impact that this will have on some of our employees. However, we believe these are necessary steps as we work to improve the business and return to profitability. The Board and I would like to thank our employees, our vendors, and our customers for their ongoing support as we work to advance Goody’s turnaround. We are certain that we will emerge from this situation as a stronger and healthier company that will be well positioned to reach its full potential.”