Christopher & Banks Corp. has become the first fashion bankruptcy of 2021 after filing a voluntary Chapter 11 petition Wednesday that will close hundreds of stores.
The filing in a Newark, N.J., federal bankruptcy court comes after the women’s fashion chain warned last month that it faced the possibility of going out of business. In a regulatory filing with the Securities and Exchange Commission, Christopher & Banks blamed the Covid-19 pandemic for its financial misfortunes, and said it might not be able to repay its loans.
A statement on its website Thursday says the retailer plans to close a “significant portion, if not all, of its brick-and-mortar stores.” Christopher & Banks has already started as liquidating stores but said operations will continue in the “ordinary course” in the near term. A seller of value-priced apparel and accessories, the company is in talks with potential buyers to sell its e-commerce business and related assets. Retail Ecommerce Ventures, known for scooping up and digitally relaunching bankrupt retailers from Stein Mart to Dressbarn, would seem to be a good suitor for Christopher & Banks.
Meanwhile, liquidation expert Hilco Merchant Resources said it will be conducting store closing sales at all 449 locations, and will offer a variety of fashion merchandise in misses, women’s and petite sizes at 40 to 60 percent off original prices. “Christopher & Banks online sales will continue. Closing discounts will not apply to online purchases,” Hilco said.
Christopher & Banks president and CEO Keri Jones said chain has “taken aggressive steps” to steer the business through the Covid-19 storm and had hoped to fend off a bankruptcy.
“Despite the tremendous advancements we have made in executing our strategic plan, due to the financial distress resulting from the pandemic and its ongoing impact, we elected to initiate this process and pursue a potential sale of the business in whole or in part to position the company for the future,” Jones added. “I want to extend my deepest gratitude to our dedicated associates, loyal customers and supportive partners for their commitment to Christopher & Banks throughout these challenging times.”
The company last month hired B. Riley Securities Inc. as investment banker and BRG, LLC as its financial advisor.
Based in Plymouth, Minn., and in operation since 1956, the retailer in its Chapter 11 filing listed total assets of $166.4 million and total debts of $105.6 million. Among the top dozen on its unsecured creditors list was a combination of landlords and vendors from China. It also listed as a contingent liability a $10 million PPP loan. Simon Property Group was listed as being owed $2.1 million, with Brookfield at $1 million and Tanger Property at $831,022. It owes Blueprint Clothing Corp, factored with CIT, $2.2 million, and Letys Fashion Design Inc., factored with Rosenthal & Rosenthal, $989,718. Also on the list was Salesforce.com, owed $1.2 million for the retailer’s e-commerce site, and FedEx, at $830,532, for freight services.
In a declaratory statement filed as part of the bankruptcy case, Jones said the debtors are the “latest victims of the retail apocalypse that was first created by a customer migration away from brick-and-mortar stores and most recently, the Covid-19 pandemic.” She said the pandemic provided the proverbial “nail in the coffin,” following years of adverse market trends. While Christopher & Banks took action to increase liquidity, such as reducing operating costs and negotiating lease concessions and deferrals, “given the continued operating losses, decline in sales and the limited runway, the debtors were unable to execute on any out-of-court solution for their liquidity constraints,” Jones said.
Jones said that based on market feedback with advisors, the company determined that a sale of the traditional brick-and-mortar business wasn’t viable or achievable under current circumstances.
At the date of its bankruptcy filing, Christopher & Banks reported 2,991 employees, comprised of 1,044 full-time salaried staff and 1,947 hourly employees.