NEW YORK (Reuters) – Discount retailer National Wholesale Liquidators said on Monday that General Electric cut its credit availability by $15 million over the last few weeks, putting a “major hardship” on its ability to pay current and past bills.
According to a letter to the company’s vendors dated Oct. 27 and seen by Reuters, GE cut credit by $10 million the week before the letter was written.
“The reason they (GE) gave us was the environment outside was so bad that they are trying to protect themselves. This has put a major hardship on us to pay both our current and past due bills,” the letter said.
Accounts payable employee Paula Lucil on Monday confirmed by telephone the contents of the letter and said that GE had later cut an additional $5 million of credit availability.
A GE representative was not immediately available to comment.
Lucil said that the West Hempstead, New York-based discount retailer was meeting with banks, adding that more information would be available on Wednesday.
“Right now we’re still working with the banks,” said Lucil. She said the company operates about 55 stores.
When a lender cuts credit availability, vendors often pull back from shipping new goods, in fear the company won’t be able to pay, said Bob Carbonell, chief credit officer for retail credit rating service Bernard Sands.
That can lead to spiraling financial troubles for a company, he said.
(Reporting by Chelsea Emery; Editing by Gary Hill)
peHUB Note: NWL is a portfolio company of Madison Dearborn Partners