NEW YORK (Reuters) – Steve & Barry’s stores will be liquidated by early 2009 after the new owners concluded they would be unable to obtain financing to keep the casual clothing retailer in business amid disappointing sales.
Steve & Barry’s had filed for bankruptcy protection in July, and in the following month it sold its business to investment firms Bay Harbour Management and York Capital Management for $168 million.
But several affiliates of the new owners filed for Chapter 11 bankruptcy protection in Manhattan on Wednesday, saying in a court filing that Steve and Barry’s revenue had suffered because of the declining health of the U.S. economy and the slump in the retail market.
“This is the hardest environment in 30 years for retailers,” said Peter Schaeffer, a partner with restructuring advisor Carl Marks. “Chances of companies that have filed for bankruptcy coming out whole is difficult.”
Because of the disappointing sales, the new owners at Steve and Barry’s violated covenants under their senior secured credit facility and have no prospects to obtain financing to keep operating the stores, the filing shows.
“The appropriate course of action to maximize value for the benefit of all their stakeholders is an orderly liquidation,” the filing said. The liquidation is scheduled to be completed by the end of this year or early 2009.
The company asked the court for permission to begin store closing sales immediately because Thanksgiving and the crucial Christmas shopping season are rapidly approaching.
RAS Management Advisors LLC is serving as restructuring adviser, and a joint venture of liquidation firms including Great American Group LLC, SB Capital Group, Tiger Capital Group and Hudson Capital Partners will assist in the liquidation, the filing shows.
Steve & Barry’s is known for its apparel lines with celebrity brands that include actress Sarah Jessica Parker, surfer Laird Hamilton and tennis star Venus Williams.
The liquidation of Steve & Barry’s is another blow for malls that are already losing a slew of tenants to bankruptcy liquidations, including home goods retailer Linens ‘n Things and department store Mervyn’s.
By Chelsea Emery