Estimated read time: 1-2 minutes
This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.
DOWNERS GROVE, Ill. (AP) -- Spiegel Inc., parent of Eddie Bauer and the Spiegel Catalog, filed for Chapter 11 bankruptcy protection Monday following a long-term decline in its credit-card business.
The apparel and home furnishings retailer, which also owns the Newport News catalog business, said it had arranged for $400 million in bankruptcy financing and expected to keep all its stores and catalog operations operating throughout the bankruptcy process.
The filing was in New York.
Spiegel said it expects to be able to gain access to the initial $150 million of financing upon approval by the U.S. Bankruptcy Court. It must meet certain conditions in bankruptcy to get access to the entire amount.
Spiegel and its filing subsidiaries listed assets of $1.74 billion and liabilities of $1.71 billion as of Feb. 22.
The company had warned for the past month that it would have to file for bankruptcy.
The retailer's descent toward bankruptcy began in 1999 when it reported a huge spike in the amount of money owed by holders of its private-label MasterCard and Visa credit cards -- the result of a fast-growth strategy that backfired.
On March 7, the U.S. Securities and Exchange Commission accused Spiegel of violating securities laws by skipping quarterly filings last year in order to conceal its auditor's conclusion that it might not be able to stay in business.
Spiegel partly resolved the complaint with a consent and stipulation agreement but still faces a federal court decision on penalties.
Spiegel said it is still seeking financing to support the credit-card business, and alluded to the risk of a Chapter 7 liquidation filing if its financial efforts fail.
Spiegel said First Consumers National Bank, the bank subsidiary that issued its MasterCard and Visa cards, is being liquidated.
(Copyright 2003 by The Associated Press. All Rights Reserved.)