C & R Files for Bankruptcy Reorganization : Retail: The menswear chain says the action is ‘a protective measure’ after bankers reportedly refused to stretch out loan repayment.
C & R Clothiers, the menswear retailer, demonstrated again early Friday what a difference a day makes by filing for bankruptcy protection less than 24 hours after its bankers reportedly threatened to seize its cash deposits.
The Culver City-based retailer, which employs about 800 workers at its 61 stores in California and Nevada, had been slowly climbing back from a disastrous and costly expansion into Northern California several years ago and was trying to persuade its bankers at Wells Fargo to stretch out repayment terms on its $11.5-million loan.
However, C & R attorneys said the bank refused to grant any extension and then sent the company a letter late Thursday threatening to seize as partial repayment of the loan some of the $4 million C & R had deposited in its Wells Fargo accounts
“The Chapter 11 (bankruptcy reorganization) filing was a protective measure designed to prevent the seizure,” said David Levene, a Century City bankruptcy attorney. “We thought a restructuring of the company could be accomplished without the bankruptcy reorganization.”
In papers, filed in U.S. District Court in Los Angeles, the company lists assets of $21.5 million and liabilities of $19.5 million.
A spokeswoman for Wells Fargo in Los Angeles, citing the bank’s longstanding policy, said the bank would not comment on the filing or its relationship with C & R.
Levene held out hope late Friday that C & R and Wells Fargo would work out their differences and bring the bankruptcy reorganization to a swift end. He said the company is planning to continue its normal operations and plans no store closures or layoffs at this time.
Jack Roth, who resigned late Thursday as C & R’s co-chairman, said he had been prepared to invest as much as $5 million in the retailer to allow it to work through its problems if Wells Fargo had agreed to extend the repayment terms of the loan.
Roth is president and chief executive of Admarketing Inc., the Century City agency that created C & R’s current television campaign featuring a rendition of “What a Difference a Day Makes,” a 1934 Stanley Adams/Maria Grever tune popularized in 1959 by rhythm and blues singer Dinah Washington.
Levene said that although C & R is not in default or in arrears on the loan, the company wanted to extend the repayment terms so it can use as much money as possible to improve its sputtering business operations. Roth said that when the bank refused new repayment terms, he withdrew his offer and resigned his position on the board of directors. However, Roth remains one of C & R’s largest shareholders.
Roth said C & R ran into trouble after an aggressive expansion into Northern California in the late 1980s turned sour, leaving the company strapped for cash.
Roth said the company had closed 10 of its least profitable locations over the past several months and was hoping that an infusion of money from him would allow it to regain its footing.
“But I wasn’t about to invest $5 million in a company so the bank could get its loan paid back right away,” Roth said. “C & R is a fine company. It had some bad years and just needed some additional money to get it going again.”
