WILMINGTON, Del. (Reuters) – The retailing business of Samsonite Corp, the world’s top luggage maker, filed for bankruptcy on Wednesday as part of a reorganization aimed at closing roughly half of its 173 U.S. stores.
Samsonite Company Stores LLC said its Chapter 11 filing is aimed at focusing the business on its outlet stores, which have fared better during a steep drop in consumer spending on travel and leisure.
Under the company’s prepackaged reorganization, creditors will be paid in full and Samsonite Corp will remain the owner of the retail business. It expects to emerge in as little as 45 days.
“The recession has caused a severe decline in consumers purchasing travel-related goods and the company has responded to this critical situation with a substantial restructuring program,” said Kyle Gendreau, the treasurer of Samsonite Company Stores and chief financial officer of Samsonite Corp.
Samsonite Corp has not filed for bankruptcy, although the filing by its retail operations is part of the parent company’s out-of-court restructuring.
Samsonite Corp was bought by funds managed by CVC Capital Partners, a private equity firm, in 2007 for $1.7 billion.
The new owners expanded the number of Samsonite’s full-price stores, a move that disappointed investors as the U.S. economy slid into a recession.
By filing for bankruptcy, the company will be able to break its lease commitments and close as many as 83 stores.
The company employs about 650 and had annual sales of $108.1 million in 2008. It said in court documents it had $233 million in assets and $1.5 billion in liabilities, largely a result of its role as guarantor on Samsonite Corp debt.
The bankruptcy follows a string of retailer failures, including Eddie Bauer Holdings, while a sharp downturn in travel and leisure spending has sent casinos, airlines and resorts into bankruptcy.
(Reporting by Thomas Hals; Editing by Derek Caney)