Submitted by Fox First at Ten on January 7th
By EILEEN AJ CONNELLYThe Associated Press
NEW YORK (AP) - The owner of Mandee, Annie Sez and Afaze clothing stores cited effects from Superstorm Sandy as it sought Chapter 11 bankruptcy protection Monday.
Big M Inc., of Totowa, N.J., filed the petition in U.S. Bankruptcy Court in New Jersey. It said in an emailed statement it intends to continue to operate its stores and expects to "emerge as a stronger company."
Court papers, however, state that the company "intends to consider all strategic options to maximize the value of its business and properties," language often seen as an indicator that a sale of the business is possible.
The family-owned retailer said in the court filing that it started a restructuring process in November 2011, after the economic downturn eroded its business and left it unprofitable. It cut expenses, refinanced debt, renegotiated leases, sold property and closed 27 underperforming stores in 2012.
Court papers said those steps had put it on a path toward profitability when Sandy hit. The storm closed most of its stores in in New Jersey, New York and Connecticut for a week or more, along with its offices and distribution center. Three stores were shuttered for a month and continue to operate on a limited basis.
Big M said that it depleted its resources in getting its stores back into operation, but that business never rebounded. The company also said in the filing that it has not yet collected from its insurance carrier, in part because of a disagreement over the amount owed by Westport Insurance Co., a unit of Swiss Re America Holding Co.
The bankruptcy filing claims the combination of the reduced business and the lack of insurance payments left Big M without the needed cash to operate, especially during the critical holiday period. A representative from Swiss Re did not immediately return a message seeking comment.
Clothing retailers typically take in more than 20 percent of their annual sales during the holiday period, according to the National Retail Federation.
Big M estimated revenue for 12 months ending Jan. 26 will be about $192 million. It reported debt of about $15 million.
The company said it has an offer for up to $13.2 million in credit to see it through the bankruptcy process arranged through Salus Capital Partners, which previously helped finance the 2011 restructuring.
Mandee, an off-price clothing retailer, caters mainly to young women. Annie Sez and Afaze appeal to slightly older female shoppers.
Big M, founded in 1948, operates 129 stores in eight states and employs about 1,200 workers, including roughly 490 full-time employees. About 250 of its staffers are unionized.
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