Women’s retailer Coldwater Creek has filed for Chapter 11 bankruptcy protection in Wilmington/
The company is longer purchasing goods and services. It also stopped honoring coupons from Groupon and others. Comenity Bank and Groupon are the two unsecured creditors, according to a Bloomberg story.
The company has stores at Christiana Mall and at Rehoboth Beach. Coldwater Creek’s stores and website are now open for business and serving customers. The company expects to start sales to liquidate its inventory in early May.
While Chapter 11 typically allows a company to go ahead with normal operations while it restructures debt, a release from the company indicates it will wind down operations.
The company, which was founded in Idaho in the 1980s as a catalog retailer, offers women’s apparel, sometimes with an outdoorsy theme.
“This difficult decision follows a comprehensive strategic and financial review of the business. The board of directors has determined that the actions we are taking represent the best path forward for Coldwater Creek and its stakeholders.,” stated Jill Deen,” CEO of the company based in Sand Point, Idaho. “While we are extremely disappointed with this outcome, the company’s declining liquidity position and the challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action.”
Coldwater Creek will hold going out of business sales in the coming months, which are historically busy shopping periods for the retailer.
In conjunction with its Chapter 11 filing, Coldwater Creek has received a commitment for $75 million in “debtor-in-possession” financing from its existing lender, Wells Fargo. Subject to court approval, this financing will be available to support the company’s operations during the wind-down process. Coldwater Creek has also reached an agreement with its lenders on a Chapter 11 plan of liquidation that was filed with the bankruptcy court.
The company also reached an agreement with inventory liquidators, Gordon Brothers Retail Partners, LLC and Hilco Merchant Resources, LLC to manage the company’s inventory clearance sales.
The plan of liquidation does not contemplate any recovery for holders of the company’s common stock, which last traded at 13 cents a share. The plan of liquidation and related disclosure statement is subject to approval by the bankruptcy court.
Apparel retailing has been under pressure, particularly at stores that cater to middle-income shoppers, with competition becoming fierce from rivals such as Talbots and Chico’s. Stores catering to upper income shoppers have fared better.
