Apollo Management LP, which took the company private through a $1.3 billion LBO in 2005, is reportedly considering a a prepackaged bankruptcy filing for the company, the report said, citing unnamed sources. Under such a deal, Apollo and creditors would negotiate restructuring terms ahead of the Chapter 11 filing. Apparently, the company is facing a tightening on its $700 million GE Capital loan, making selective payments to vendors, and in turn, some suppliers have stopped shipping merchandise, the Post said.
The Deal's Matt Miller examined the plight of retailers recently, noting:
It's easy enough to spot many of the chains that are struggling. In downgrading Linens 'n Things Inc., for example, Moody's Investors Service noted that the soft-goods company last year accelerated the drawing down of its revolving credit facility to cover cash flow deficits. This situation will likely continue through this year, Moody's noted, adding that the company, with its "weak operating performance" and its "history of mispositioned product offering," will have difficulty raising more money in the marketplace.
The list of recent retailer Chapter 11s includes specialty products company Sharper Image Corp., furniture seller Wickes Holdings LLC, luxury goods retailer Fortunoff Fine Jewelry and Silverware LLC and catalog company Lillian Vernon Corp. The list of PE-backed companies to go bust, some of which these are on, is even longer. - Carolyn Murphy
See story from NY Post
See story about retailers and bankruptcy from TheDeal.com
See Dealwatch: Home furnishings retailers
See Dealwatch: PE-backed bankruptcies
Comments
Will Linens 'n Things Inc. be the latest private equity-backed retailer to go bust? The New York Post believes it may be true. 
Bed Bath & Beyond wins!