A sluggish economy stampeded through an already-fragile industry like a rogue tornado in 2008, flattening everything in its path and leaving behind a smattering of once-proud companies that were unable to pick themselves off the proverbial mat. The prospect of consolidation couldnt stave off bankruptcy for some of the major players within the industry, as several manufacturers and retailers were forced to file for Chapter 11 amidst an economic environment fraught with plunging sales and waning consumer interest. Most notable among companies who fell into bankruptcy in 2008 were Mervyns, Boscovs, and Steve & Barrys.
In August, Steve & Barrys agreed to be purchased by a unit of investment firms Bay Harbour Management and York Captial Management for $168 million.
The firms planned to operate the apparel chain as a going concern and to acquire the retailers store leases, merchandise from stores, and all intellectual property rights, including celebrity and brand licenses. However, struggling sales and “the general health of the American economy and the state of the retail market ” prompted the retailer to file for bankruptcy protection for a second and apparently final time in November.
After suffering a first quarter loss of $6.3 million that was fresh on the heels of a $16.3 million loss for fiscal 2007, Shoe Pavilion filed for voluntary bankruptcy protection in July. According to its filing at the U.S. Bankruptcy Court, the Sherman Oaks, CA-based retailer had $61 million in assets and between $25 million and $27 million in liabilities.
In September, Versa Capital Management, Inc., a Philadelphia-based private equity firm that recently acquired Bobs Stores, agreed to purchase Boscovs out of bankruptcy, but the deal was terminated when a family group led by former Boscovs chairman Albert Boscov and former president Edwin Lakin agreed to purchase the assets in November.
Goodys Family Clothing
Also succumbing to bankruptcy this year was Goodys Family Clothing, which filed for protection in June citing the pressures from tightening credit markets, among other factors.