Clothestime Says Accord Reached With Creditors

Clothestime Inc. said Wednesday that it has reached an agreement with its unsecured creditors that will clear the way for the troubled company to file a reorganization plan by the end of March.

The young women’s apparel company, which entered bankruptcy late in 1995, did not provide details of the plan, which will be presented to U.S. Bankruptcy Judge John J. Wilson in Santa Ana.

Clothestime, which operates 331 women’s apparel stores in 17 states and Puerto Rico, has been working with creditors for more than a year on a strategy that would lead to a reorganization plan. Earlier this year, attorneys for the company and its creditors said they were on track toward reaching a settlement.

Clothestime entered bankruptcy during a lengthening string of unprofitable quarters. The Anaheim-based company soared during the mid-1980s with its strategy of offering cheaper alternatives to well-known labels with higher prices.

But that strategy lost its edge during the early 1990s as competitors offered more attractive fashions. Clothestime’s sales and profits stalled as competitors began to discount their well-known brands.