Three creditors of Wieboldt Stores Inc. filed a petition late Tuesday in U.S. Bankruptcy Court here to declare the troubled retailer insolvent and force the liquidation of the 101-year-old company.
The three apparel companies, which include Pacific Trail Sportswear and Brickland Co., are owed a total of ”about $180,000,” said attorney Lawrence M. Cooper of the Chicago law firm Cooper & Cooper Ltd., which is representing the creditors.
A spokesman for Wieboldt Stores said the retailer would file a petition for a Chapter 11 bankruptcy reorganization within the next 48 hours. Under Chapter 11, a company is protected from its creditors` claims while it continues operating and works out a plan of reorganization.
New York investor Alan Cohen, who last month purchased an option to buy Wieboldt`s stock from its previous owners, will not walk away from the company, the spokesman said.
”Our position is that we didn`t want to do this (file Chapter 11), because it isn`t to the benefit of the creditors–this will only cost them more money,” said spokesman Nan Kilkeary. ”But as Cohen told last week`s meeting of creditors in New York, `I don`t want to file a Chapter 11, but I`m not afraid of it.` ”
”Wieboldt`s asked its creditors to just stand by while there were lawsuits (by trade creditors in federal court here) pending, and then they called a meeting in New York to ask us to wait another 90 days,” Cooper said. ”Well, we`ve heard that one before.”
Cooper said Wieboldt`s 90-day ”grace period,” apparently agreed to by its largest creditors at the New York meeting, ”takes them through the best selling season” of the year.
”Who wouldn`t want to be in business for that time (period) and then go out (of business)?” he said.
Cooper said he would file an emergency petition Thursday asking the bankruptcy court to appoint a trustee and begin liquidation immediately.
Cohen, who agreed to purchase the troubled company if he could reach some kind of settlement with 1,700 creditors owed more than $20 million, apparently got a 90-day moratorium on the debts from Wieboldt`s 50 largest creditors last week. A creditors committee was formed at the meeting to help the firm work out a new business plan.
M.L. Rothschild won the right to repossess some $6.8 million in inventory, roughly half of the retailer`s current stock, in Cook County Circuit Court Monday. The Chapter 7 filing Tuesday temporarily blocks Rothschild from removing its inventory from the stores.
”One of the reasons for filing now is that Rothschild has gotten permission to take out millions of dollars in merchandise, without any court supervision,” Cooper said.
