Cherokee Files 2nd Chapter 11 Petition

Cherokee Inc. said it filed its prepackaged Chapter 11 reorganization petition Monday in federal Bankruptcy Court in Delaware.

It was reported that the Sunland apparel maker listed $107.1 million in assets and $122.8 million in debts. It is the second Chapter 11 filing for the company, which has been burdened by debt from a 1989 leveraged buyout.

As previously announced, Cherokee’s bankruptcy plan calls for swapping all its 11% senior subordinated notes due in 1999 for about 89.9% of the common stock of the reorganized Cherokee. All outstanding trade debt would be exchanged for about 8.3% of the common stock of the reorganized company, and existing Cherokee stock would be converted to about 1.8% of the common stock in the post-bankruptcy company.

The plan is expected to reduce Cherokee’s long-term debt from about $100 million to $19 million.

Cherokee entered and emerged from another prepackaged bankruptcy last year. In the fiscal year that ended May 28, it lost $24.8 million on $114.1 million in sales. The company has recently been streamlining its apparel selection to focus on casual clothes.