Stage Stores Files For Bankruptcy Under Chapter 11
Stage Stores, Inc, a retailer of trend-right, name-brand values for apparel, accessories, cosmetics, footwear and home goods has filed voluntary petitions under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the Southern District of Texas, Houston Division. Meanwhile, the company will take a phased approach to reopening its stores.
Simultaneously, the company will solicit bids for a going concern sale of the business or any of its assets and initiate an orderly wind-down of operations. The company will terminate the wind-down of operations at certain locations if it receives a viable going-concern bid.
“This is a very difficult announcement and it was a decision that we reached only after exhausting every possible alternative. Over the last several months, we had been taking significant steps to attempt to strengthen our financial position and find an independent path forward. However, the increasingly challenging market environment was exacerbated by the COVID-19 pandemic, which required us to temporarily close all of our stores and furlough the vast majority of our associates. Given these conditions, we have been unable to obtain necessary financing and have no choice but to take these actions,” said Stage Stores president and chief executive officer Michael Glazer.
The company intends to seek approval for a consensual use of cash collateral to ensure it has the liquidity necessary to support its operations in Chapter 11. It has also filed a number of customary motions seeking court authorisation to support its operations during the court-supervised process, including the continued payment of employee wages, salaries, and health benefits without interruption for those employees that are working during this time.
As part of the wind-down, the company expects to honour existing customer programmes, including gift cards and returns, for the first 30 days after a store reopens. The company anticipates that it will stop accepting any outstanding gift cards or honouring other customer programmes after that time.
The first phase of approximately 557 stores is anticipated to open on May 15, 2020, while the second phase of approximately 67 stores is expected to open on May 28, 2020 and the balance of the chain is expected to open on June 4, 2020.