By Sara Randazzo
Women's dress and formalwear retailer Cache Inc. on Wednesday
filed for Chapter 11 bankruptcy-court protection in Delaware, the
latest in a string of mall-based retailers seeking to restructure
or liquidate through the protection of the courts.
Cache listed liabilities of between $50 million and $100 million
and assets of between $10 million and $50 million in a Chapter 11
petition in U.S. Bankruptcy Court in Wilmington, Del.
Cache Chairman and Chief Executive Jay Margolis said the filing
was made "with the goal of securing Cache's future."
Through the bankruptcy, Cache plans to close some of its 218
stores and renegotiate its leases, the company said. As part of
"contingency planning," Cache said it has secured an offer from
liquidators at SB Capital Group LLC and Tiger Capital Group LLC
that could be challenged by higher offers at a bankruptcy
auction.
Cache plans to sell the rights to its name if it can't find a
buyer willing to keep its stores alive, according to court
filings.
Founded in Miami in 1976, Cache traditionally focused on selling
formal dresses to women in their 20s. An ill-timed expansion
between 1999 and 2006 that nearly doubled the chain's store count,
to 306, and put more emphasis on sportswear harmed the brand, the
company said in court filings.
Salus Capital Partners is providing $22 million in bankruptcy
financing to help fund the case, the company said. Salus became
Cache's lender in September when it provided the company with a $30
million credit facility that matures in 2017, replacing a line of
credit from Wells Fargo.
Cache owes Salus $16.43 million on the prebankruptcy facility
and another $11.36 million in trade debt. The company owes more
than $1 million each to major mall landlords Simon Property Group
Inc. and General Growth Properties Inc., filings show, and has
defaulted on 50 of its leases.
The company filed a series of routine requests with the
bankruptcy court, including permission to continue paying its 2,512
employees, keep running its customer-recognition programs and
maintain its bank accounts.
Cache hasn't turned a profit since 2011. The company recorded a
losses of $12.1 million in fiscal 2012 and $34.4 million in 2013,
filings show. It predicts a loss of $32.7 million for 2014.
Trade vendors began clamping down on the company over the
summer, it said, and imposed stricter terms for paying bills. In
August, Cache hired financial advisers at Janney Montgomery Scott
to explore options for the company's future.
Nasdaq is in the process of delisting the company's shares
because its market value fell below $5 million. Cache said
Wednesday it doesn't plan to appeal the decision.
It has been a rough few months for distressed women's retailers.
Since December, Deb Shops, Delia's Inc. and Wet Seal Inc. have also
sought Chapter 11 protection. Body Central Corp. said it would
liquidate through a state court proceeding.
Lawyers at Pachulski Stang Ziehl & Jones are representing
Cache in the case, numbered 15-10172.
Stephanie Gleason and Lillian Rizzo contributed to this
article.
Write to Sara Randazzo at sara.randazzo@wsj.com
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