(Adds sale plans, causes of bankruptcy, comments from chief restructuring officer, byline)
By Jonathan Stempel
July 16 Love Culture Inc on Wednesday filed for Chapter 11 bankruptcy, becoming the latest women's apparel retailer to seek protection from creditors, and said it may be sold after having received interest from possible buyers.
The company, which according to its website has 82 stores stretching from Massachusetts to Hawaii, joins Ashley Stewart Holdings Inc, Coldwater Creek Inc, Dots LLC and Loehmann's Inc among retailers to file for bankruptcy since late last year as consumers curb spending and visit malls less.
In a court filing, the company's chief restructuring officer, Rick Bunka, said sales remain below projections, while vendors in April began curbing credit and demanding payment for goods faster or upon delivery, leading to "significant liquidity challenges."
Love Culture said it plans during the bankruptcy process to close money-losing stores, restructure its debt and investigate options "including a possible sale of substantially all of its assets as a going concern."
It said "several financial and strategic buyers" have expressed interest in the company, and four have submitted letters of intent. Two earlier bids were rejected as inadequate.
Founded in 2007 by former Forever 21 executives Jai Rhee and Bennett Koo, Love Culture is aimed at women in the 18-to-35 age range. It opened an online store in 2010 and started the more upscale brand Boutique Culture in 2012.
But starting in early 2012, overexpansion led to "poor performance," while the cost to upgrade technology and expand online added to liquidity problems that were disrupting "consistent and meaningful delivery" of up-to-date merchandise to stores, Bunka said.
Love Culture is seeking a buyer through a court-supervised auction and hopes to have a sale hearing by July 29. If the process is prolonged, the company "may not have sufficient liquidity to support a sale of the assets," Bunka said.
In a petition filed with the U.S. bankruptcy court in Newark, New Jersey, Love Culture said it has as much as $50 million in both assets and liabilities.
Net sales totaled $162.4 million in the year ended Feb. 1, 2014. Four of the company's stores are in New Jersey.
Love Culture's advisers include PricewaterhouseCoopers LLC and the law firm Lowenstein Sandler.
The case is In re: Love Culture Inc, U.S. Bankruptcy Court, District of New Jersey, No. 14-bk-24508. (Reporting by Jonathan Stempel in New York; Editing by Leslie Adler)