NEW YORK (Reuters) – U.S. shoe retailer The Walking Company Holdings Inc (WALK.PK) has filed for bankruptcy protection, with a plan to close almost half of its stores.
The company, which sells comfortable shoes at its namesake stores and also runs the Big Dogs sportswear clothing line, filed a voluntary Chapter 11 bankruptcy petition in California on Monday, saying it would seek approval to begin store closing sales at 90 of its 210 stores immediately.
With only a few weeks remaining in the holiday shopping season, the company said it has pre-printed store closing signs and was ready to begin the wind down, subject to court approval, according to court documents.
The retailer expanded rapidly, more than doubling in size from 2006 through 2008, by opening about 140 new stores. It said it was forced to seek court protection because it was unable to convince landlords to cut costs under its leases in a difficult retail environment. It has already started closing its Big Dog clothing store chain, which once had about 200 stores, and is set to close its final 8 locations by the year-end.
The retailer said it will be able to use bankruptcy to close underperforming stores under a “right sizing” strategy and expects to file a “pre-negotiated” reorganization plan within weeks.
The Walking Company, which is about 56 percent owned by its chairman, Fred Kayne, said in court papers it has assets of about $103 million and liabilities of about $76 million.
The retailer had sought to raise capital or sell itself to avoid bankruptcy, but those efforts failed due to a lack of operating profits amid the recession and above-market rents that it was paying for many of its stores.
The company has obtained debtor-in-posession financing from Wells Fargo Retail Finance and Wells Fargo is interested in providing exit financing, according to court documents. It said it had a commitment from an investor group led by Kayne Anderson Capital Advisors for $10 million in new capital to be provided to the reorganized company. That group is led by Richard Kayne, the brother of Fred Kayne.
The case is In re: The Walking Company, U.S. Bankruptcy Court, Central District of California, No. 09-15138. (Reporting by Emily Chasan; editing by Andre Grenon)