(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
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