The Spiegel Group has filed for bankruptcy, and plans to keep on operating.
Spiegel, parent of the Spiegel and Newport News catalogs and the Eddie Bauer retail chain, blamed this decision to its poorly performing credit card business. The company said on March 11 that it missed performance requirements tied to its credit card sector and was forced to divert all cash flow to repay investors.
As it filed for Chapter 11 bankruptcy protection today, the beleaguered catalog company announced that it had secured a $400 million debtor-in-possession financing package from Bank of America, Fleet Retail Finance and the CIT Group/Business Credit Inc. The package will enable the company to fund its operations during the reorganization process.
The Downers Grove, IL-based firm said all stores and catalog operations are open, and employees will be paid the same wages and benefits. Spiegel is no longer honoring the private-label credit cards issued by FCNB to customers of its three divisions.
Spiegel expects to access $150 million of the funding upon Bankruptcy Court approval of an interim financing order. The petition is filed in the U.S. Bankruptcy Court for the Southern District of New York.
On Friday, Spiegel named Geralynn Madonna the new president and CEO of Spiegel Group and Newport News. William Kosturos was named interim CEO and chief restructuring officer of Spiegel Inc. on March 1.
In its filing documents, Spiegel Inc. and its subsidiaries listed total assets with a book value of $2.7 billion and total liabilities of $1.7 billion as of Feb. 22, 2003.
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