Steve & Barry's said in a bankruptcy filing late Wednesday that it doesn't have the money to stay in business and is being forced to undergo a fire sale. Lenders led by General Electric Co.'s (GE) General Electric Capital Corp., which control Steve & Barry's access to cash, are demanding that the company be sold or hire liquidators by July 31.
Court documents indicate that harsh capital markets put bankruptcy financing out of reach for the privately held Port Washington, N.Y. company. Steve & Barry's has no cash of its own that's not subject to seizure by senior lenders owed a total of $165 million. That leaves the company with no choice but to heed lenders' demands that it sell its assets “by no later than July 31,” court documents say.
Due to its bankruptcy petition, Steve & Barry's needs court permission to strike a deal with the banks that will allow it to use cash for a brief period, until Aug. 1. “Absent authorization from the court to use the cash . . . (Steve & Barry's) will have to cease operations immediately,” lawyers wrote in documents filed with the U.S. Bankruptcy Court in Manhattan.
According the new filings, Steve & Barry's tried and failed to find a buyer or investor before it filed for Chapter 11 protection. Court documents say the company has not abandoned hope that a buyer will step up by a July 29 auction and offer to keep the business open as a going concern. If no prospective owner appears at the auction, however, the retailer will be picking a firm “to liquidate the inventory at all or some” of its retail stores, according to court documents.
