House of Fabrics Inc., the Sherman Oaks fabrics retail store chain that is operating under Chapter 11 bankruptcy protection, has filed a reorganization plan with the bankruptcy court in hopes of emerging from bankruptcy by Jan. 31.
The company also reported that in the second quarter ended July 31, House of Fabrics posted an $11.04-million loss, compared to an $11.65-million loss in the same period a year earlier.
Its sales for the latest quarter fell 35% to $71.9 million from $110.1 million in the second quarter a year ago.
The company has closed more than 270 stores in the past year. House of Fabrics now operates 364 fabric and craft stores in 34 states. The company filed for bankruptcy protection last November.
For the latest six-month period, the company posted a $19-million loss compared to a $13.1-million loss a year ago, while its sales for six months fell 35% to $145.7 million, compared to $224.8 million last year.
The company's reorganization plan would allow it to convert $120 million in short-term loans it borrowed from 11 banks to be paid back over a 10-year period.
Also, the company's plans call for its unsecured creditors to receive 98% of the stock issued by a new, reorganized House of Fabrics in exchange for their debt.
For current shareholders, this reorganization would mean that House of Fabrics shareholders would own collectively only 2% of the common stock in the new company, plus warrants to purchase another 8% of the common stock in a reorganized company.
However, the bankruptcy court and House of Fabrics' creditors have not yet approved the company's reorganization plan.