Women’s apparel seller Coldwater Creek filed for Chapter 11 bankruptcy protection on April 11, and plans to liquidate in May.
“This difficult decision follows a comprehensive strategic and financial review of the business,” said Jill Dean, president and CEO of Coldwater Creek, in a press release. “While we are extremely disappointed with this outcome, the Company’s declining liquidity position and the challenging retail environment, together with the fact that we have exhausted all other possibilities, requires that we take this action.”
In conjunction with its Chapter 11 filing, Coldwater Creek has received a commitment for $75 million in debtor-in-possession financing from its existing lender, Wells Fargo. Subject to court approval, this financing will be available to support the Company’s operations during the wind-down process.
Coldwater Creek has reached an agreement with its lenders on a Chapter 11 plan of liquidation, as well as an agreement with inventory liquidators Gordon Brothers Retail Partners and Hilco Merchant Resources to manage the company’s inventory clearance sales.
On October 14, Coldwater Creek it was looking to explore strategic alternatives, including, but not limited to, partnerships, joint ventures or a sale or merger. Two weeks later, Coldwater Creek announced a 20% reduction in its corporate workforce, which was part of a restructuring and cost reduction program that was expected to generate $20 to $25 million in pre-tax savings in fiscal 2014.
Coldwater Creek’s consolidated net sales declined 17.9% year-over-year in the third quarter of 2013. Direct sales declined 17.4%. The merchant did not file fourth-quarter or year-end financial results, though its fiscal year ended Feb. 2.
The merchant’s balance sheet also suffered: On Nov. 2, cash totaled $6.8 million, as compared with $31.3 million on October 27, 2012.
Coldwater Creek is the second major retailer to file for Chapter 11 this month. On April 3, gizmos and gadgets seller Brookstone filed a pre-arranged Chapter 11, with the intent to sell itself to an affiliate of Spencer Spirit Holdings for an aggregate purchase price of approximately $147 million.