Loehmann’s files for bankruptcy protection

Loehmann’s Holdings Inc., a seller of discounted designer goods, filed for bankruptcy protection with a plan to reorganize by cutting $115 million in debt.

Loehmann’s, founded in 1921 by Frieda Loehmann, sells clothes from brands such as Michael Kors, Calvin Klein and Donna Karan at more than 55 U.S. stores.

The Bronx, N.Y.-based retailer listed $204.5 million in assets and $232.7 million in debt as of Oct. 30 in a Chapter 11 petition filed Monday in U.S. Bankruptcy Court in Manhattan. A quick restructuring will help Loehmann’s preserve 1,900 jobs, the company said.

“The decline in economic conditions in several markets in which Loehmann’s stores are concentrated, mainly California, the Northeast, Midwest and Florida, has had an adverse effect on Loehmann’s financial condition,” Chief Financial Officer Joseph Melvin said in a court filing.

Under Loehmann’s proposed restructuring, current owner Istithmar World — a unit of Dubai World — and noteholder Whippoorwill Associates Inc. would get equity in the reorganized company. Loehmann’s said last month that its offer to exchange $110 million of senior notes didn’t get enough support and it wouldn’t make an interest payment on the securities.

U.S. retailers’ sales dropped during the economic slump that began in 2007 as consumers, whose spending accounts for about 70% of the U.S. economy, cut back.