UPDATE 1-Jennifer Convertibles files for pre-packaged bankruptcy

Mon Jul 19, 2010 9:43am EDT

* In deal to convert largest creditor's debt to equity

* Lists assets of $30 mln, debt of $46.3 mln

* Shareholders to be wiped out

July 19 (Reuters) - Home furnishings retailer Jennifer Convertibles Inc JENN.PK filed for bankruptcy protection under a pre-arranged deal that will convert debt owed to its supplier and largest creditor, Haining Mengnu Co Ltd, into equity.

The deal will be incorporated into a reorganization plan subject to approval of the bankruptcy court, the company said in a statement.

"The decision to file for Chapter 11 protection was based primarily on lack of liquidity which resulted from the substantial losses the company has incurred in recent periods," Jennifer Convertibles said.

The company said it failed to get alternative financing that would allow it to continue operating outside of bankruptcy.

Shareholders of the company would be wiped out under the proposed plan.

In court papers filed late on Sunday, Jennifer Convertibles listed assets of $30 million and liabilities of $46.3 million. The filing included 11 affiliates.

Shares of the company closed at 30 cents Friday on the Pink Sheets.

The case is In re: Jennifer Convertibles Inc, U.S. Bankruptcy Court, Southern District of New York (Manhattan), No: 10-13779. (Reporting by Santosh Nadgir in Bangalore; Editing by Unnikrishnan Nair)

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