Bankruptcy Looms Likely as Macy’s Misses Deadline

R. H. Macy & Co. apparently failed to meet an earlier promise to pay its overdue bills on Saturday, creditors said, leading to mounting anticipation that the debt-ridden retailer will soon file for bankruptcy court protection.

Macy’s representatives declined to discuss whether upward of 20,000 suppliers, who are owed an estimated $150 million, were paid by the retailer’s self-imposed deadline. But several vendors said they were told by the company, which operates the Bullock’s and I. Magnin department stores as well as the flagship Macy’s chain, that no checks were issued.

Macy’s banks said they would not be providing money for supplier payments. Analysts said the banks’ position demonstrates how little faith they have in Macy’s ability to solve its problems without filing for bankruptcy protection. Unless vendors are paid, they will refuse to ship spring merchandise to Macy’s, compounding its financial problems, analysts said.

Macy’s precarious situation is the latest in a series of financial debacles that have become the legacy of the go-go, debt-is-good 1980s. Many American businesses took on enormous debts throughout the decade to expand their operations or head off takeover attempts. But high interest rates on bonds issued to raise cash--coupled with a recession that crippled sales--left many companies unable to repay their debts and still have enough money to operate.

Campeau Corp., which operated the Allied and Federated department stores, filed for bankruptcy in 1990. Carter Hawley Hale, operator of the Broadway department stores, sought bankruptcy court protection in early 1991.

Macy’s, staggering under the weight of $3.5 billion in debt, is widely expected to become the third major department store chain to seek bankruptcy protection.

A bankruptcy filing by the 134-year-old retailer, a key figure in American merchandising lore, became virtually inevitable late Friday when a last-minute rescue bid by billionaire businessman Laurence A. Tisch fell apart.

Tisch, a Macy’s investor and head of CBS Inc. and the Loews Corp. tobacco, hotel and insurance conglomerate, had proposed to inject about $1 billion into the retailer to buy out its existing owners and creditors. Tisch’s deal called for repaying the merchandise suppliers and paying off a large portion of the debt.

Tisch’s plan broke down, however, when Prudential Insurance Co. of America balked at refinancing the mortgage loans it holds on dozens of Macy’s stores.