NEW YORK, (AP) – U.S. discount retailer Loehmann’s is filing for bankruptcy after its Dubai government-linked owner failed to reach a debt-extension deal with creditors.
Loehmann’s says the Chapter 11 filing Monday in the U.S. Bankruptcy Court for the Southern District of New York is “pre-negotiated,” meaning it could play out faster than a traditional bankruptcy filing.
Dubai’s Istithmar World investment unit bought New York-based Loehmann’s for $300 million in 2006. The 89-year-old retailer sells designer brands at discount prices at 48 stores in 13 states and the District of Columbia.
Istithmar is a subsidiary of troubled state conglomerate Dubai World.
Istithmar’s CEO Andy Watson says the company hopes to achieve a “consensual restructuring.”
Loehmann’s late last month had tried to buy more time to pay its debts by asking lenders to swap bonds coming due next year for ones that matured in 2014 but it said it had failed to get enough creditors to sign on to its plan.
One of Loehmann’s lenders, Crystal Financial LLC, will offer it a provide a $45 million line of credit so the company can continue operating. It its filing Loehmann’s says it has already closed seven underperforming stores this month and is seeking to reject nine leases from stores it has closed.
Loehmann’s traces its roots to 1921, when Frieda Loehmann opened the retailer’s original store in Brooklyn. It is perhaps best known for its “Back Room,” where bargain shoppers search for designer clothes on the cheap.
The retailer previously filed for Chapter 11 reorganization in 1999, emerging in 2000 after closing 25 stores.