Fortunoff Considers New Bankruptcy Filing

Update: Fortunoff has filed for Chapter 11 bankruptcy protection.

NEW YORK (Reuters) – U.S. retailer Fortunoff is considering filing for bankruptcy again, nearly a year after the company was bought out of bankruptcy for about $100 million by NRDC Equity Partners, according to sources familiar with the matter.

The company is in discussion with liquidators and talking to its lenders after struggling to pay its bills in recent weeks, the sources said.

Fortunoff, which sells jewelry, dinnerware and furniture, is being shopped to prospective buyers, the company said.

“Potential buyers are negotiating to buy the business,” said Fortunoff spokeswoman Arlene Putterman. “Negotiations are still going on.” She was unable to comment on whether the company planned to file for bankruptcy again.

NRDC, which also owns the Lord & Taylor department store chain, declined to comment.

Last year, a New York court granted the struggling retailer permission to dismiss its Chapter 11 bankruptcy case.

After being bought by NRDC in March last year, Fortunoff had asked the U.S. Bankruptcy Court for the Southern District of New York to dismiss its bankruptcy case after reaching an agreement with a group of creditors.

The retailer, which began as a neighborhood venture in Brooklyn in 1922, was hurt deeply by the U.S. economic downturn as consumers cut back sharply on buying discretionary items such as jewelry and home furnishings.

Adding to U.S. retailers’ woes, the 2008 holiday season was the weakest in nearly four decades.

“With the consumer basically shutting down their spending, many retailers, especially the middle and upper retailers, are going to feel a pinch,” said Dominic DiNapoli, chief operating officer at restructuring adviser FTI Consulting Inc (FCN.N). (Reporting by Emily Chasan and Chelsea Emery; additional reporting by Aarthi Sivaraman; Editing by Brian Moss and Tim Dobbyn)