(Reuters) – Retailer Mervyn’s LLC may pay accrued vacation to its fired employees if its closing-down sales raise enough cash to pay off its debt to Wachovia Corp (WB.N: Quote, Profile, Research, Stock Buzz), the Wall Street Journal reported, citing a court hearing.
The privately held retailer withheld accumulated vacation pay from staff who lost their jobs in October, citing pressure from creditors and a court order, the paper said.
The company owed bank Wachovia $329 million when it filed for Chapter 11 bankruptcy protection on July 29, the paper said.
In August, the company said 26 of its 176 stores would be shuttered by November. To fund the chain’s ongoing operations, Mervyn’s received debtor-in-possession financing of $465 million in July from a lender group led by Wachovia Capital Finance Corp.
Mervyn’s could not be immediately reached for comment from Reuters.
(Reporting by Supantha Mukherjee in Bangalore, editing by Will Waterman)