Report: Mervyn's May File for Bankruptcy
New York City Hayward, Calif.-based Mervyn’s may be forced to file for Chapter 11 bankruptcy protection, perhaps as early as this month, The Wall Street Journal reported on its Web site on Sunday.
The company has been trying to persuade vendors to send shipments for the back-to-school season, but if they don't agree, the chain may have no choice but to file for bankruptcy, the paper said in a report citing unnamed sources.
Some of Mervyn's vendors have stopped shipping to the company, with its access to financing pulled by some key lenders, according to The Wall Street Journal.
A private investment group including Sun Capital Partners Inc, Cerberus Capital Management, Lubert-Adler and Klaff Partners LP bought Mervyn's from Target Corp. in 2004.
CIT Group Inc. stopped providing financing to the retailer in the spring, according to the report.
The Journal said the chain’s private-equity buyers did not stand to lose much from a liquidation of the company because of the way they originally structured the deal.