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By Sarah Chaney 

Gracious Home, an upscale New York City housewares chain, on Wednesday filed for chapter 11 protection in the hopes of salvaging its business amid clashes with its landlords and its lender.

Robert Morrison, Gracious Home's chief executive, blamed Gracious Home's financial woes on the rise of people shopping online and increased competition from big-box retailers such as Bed Bath & Beyond. The Manhattan retailer has also been sparring with its four landlords and its senior lender, Signature Bank, which has left the company unable to pay its debts, Mr. Morrison said in a declaration filed on Thursday with the U.S. Bankruptcy Court in Manhattan.

Signature Bank declared Gracious Home in default on its loan in May. As a result, Mr. Morrison said, the lender tightened its borrowing terms, eventually accelerating repayment of the loan. Gracious Home says this forced it to delay rent and other payments.

A forbearance agreement reached with the bank last month gave the retailer some breathing room, but Gracious Home says it came at a price: the hiring of a chief restructuring officer chosen by the bank who would start liquidating its assets.

Gracious Home's inventory has since been sold at "below-market prices," Mr. Morrison said, and it hasn't been able to get approval from a Signature Bank representative to pay its landlords, suppliers or employees.

A Signature Bank spokeswoman declined to comment.

Founded in 1963 by Cuban immigrant Natan Wekselbaum and his brother David, Gracious Home began as a small neighborhood hardware store on Manhattan's Upper East Side.

Today, Gracious Home operates a housewares and home furnishings business at two stores on the Upper East Side as well as a store on the Upper West Side and another in Midtown's NoMad neighborhood north of Madison Square Park.

The retailer is in the process of closing its Upper West Side store, but no stores had been closed as of noon Friday, according to a person familiar with the matter. Representatives for Gracious Home weren't available for comment.

Gracious Home had $54 million in sales last year and it expects to bring in $43 million this year.

But that hasn't been enough to stop the red ink, according to Mr. Morrison. The retailer, which lost $2 million last year, has "suffered substantial net earnings losses for the past several years," said Mr. Morrison. That loss is expected to grow to $4 million in 2016, he added.

Gracious Home also filed for chapter 11 protection in 2010, which left investment group Americas Retail Flagship Fund LLC in control.

In 2015, the company b rought in a former Wal-Mart executive , Dottie Mattison, who hoped to breathe new life into Gracious Home.

Mr. Morrison succeeded Ms. Mattison, who resigned earlier this year. Mr. Morrison says Gracious Home is worth salvaging and the retailer hopes to use the breathing room offered by chapter 11 to reorganize and restart some of its operations with "as little disruption and loss of productivity as possible."

Gracious Home is seeking court approval to use its lenders' cash to keep the doors open at its stores during the bankruptcy case. It informed its 111 employees of possible layoffs earlier this month, and Mr. Morrison said the company hopes "to retain a percentage of their employees upon reorganizing into a smaller organization."

Judge Mary Kay Vyskocil has been assigned the case, numbered 16-13500. Lawyers from Trenk, DiPasquale, Della Fera & Sodono are representing Gracious Home. Gracious Home is slated to make its bankruptcy court debut on Monday.

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Lillian Rizzo

and Suzanne Kapner contributed to this article.

(END) Dow Jones Newswires

December 16, 2016 15:14 ET (20:14 GMT)

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