Garden Botanika, Inc., Redmond, WA, has filed for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Western District of Washington at Seattle.
The court papers list $17.9 million in assets and $8.1 million in debts, including $421,409 owed to Miami printer Avanti Case Hoyt; $280,788 to Banta Catalog Group, Maple Grove, MN; and $113,678 to Experian Direct Technology, Chicago.
Also listed as a creditor was direct marketing consultancy O’Keefe Henry Direct, Highland Park, IL. No debt amount was listed.
The total list of creditors, according to the court papers, is between 200 and 999.
In connection with its bankruptcy filing, the company will seek authority to close 95 of its 245 retail stores nationwide, lay off approximately 200 full-time and 1,000 part-time workers, and liquidate the related inventory by May 31. The stores are located in 34 states, and the bulk of the closures will occur in the Midwest and Southeastern United States.
Garden Botanika has negotiated a credit facility in the amount of $7.0 million in debtor-in-possession financing from BankBoston Retail Finance Inc. to fund its operations during the voluntary reorganization period. Both the BankBoston financing and store closings are subject to Court approval.
“The layoffs we’re announcing today are a regrettable outcome of the bankruptcy filing, but they are the right thing to do for the sake of the business, our creditors and our shareholders,” said CEO Arlee Jensen in a statement. “We intend to do everything possible to make this transition a smooth one for the women and men whose jobs are being eliminated.”
The bankruptcy filing comes on the heels of more than a year of declining fortunes for the retail and catalog company, which sells botanically based skin care products and cosmetics. Early in 1998 the company reported that its annual mail-order sales had dropped 41% due to a planned reduction in catalog circulation. Throughout 1998, the company’s sales figures consistently were at double-digit levels below those of 1997.
In mid-January 1999, president and CEO Michael Luce was succeeded by Jensen. In late January, the Nasdaq National Stock Market served notice to Garden Botanika that the company no longer met the criteria for listing due to its market capitalization and continuing bid price deficiencies.
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