Mervyns Files for Chapter 11
New York City Mervyns LLC filed for bankruptcy protection on Tuesday, the latest in a series of retailers struggling amid a slumping economy. The privately held company said that all of its 175 locations will remain open as it reorganizes. The majority of Mervyns’ stores are in California, which has been hit hard by the real estate slump.
"Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry," CEO John Goodman said in a statement.
The chain has been shuttering stores and leaving states such as Oregon and Washington since 2005, after a consortium of private-equity players including Sun Capital Partners Inc. bought Mervyns from Target Corp. for $1.2 billion.
Mervyns, along with some affiliates, filed for Chapter 11 protection from its creditors in U.S. bankruptcy court for the District of Delaware. According to court documents, Mervyns listed liabilities and assets of $500 million to a $1 billion each, with Levi Strauss & Co. as its largest unsecured creditor.
The filing did not surprise industry experts. In recent weeks, a growing number of vendors were delaying shipments to Mervyns.
Company spokesman James Golden said it was premature to discuss layoffs or store closings.