CL Fashion Considers Chapter 11 Conversion
CL Fashion Inc., the manufacturer that abruptly closed its doors last month in the wake of a Chapter 7 involuntary bankruptcy petition filed against it by three unsecured creditors, was poised at press time to convert the petition to a Chapter 11 bankruptcy protection filing.
That was the late word from Leonard Rabinowitz, a principal with CL Fashion and a co-founder of Carole Little, which merged last June with Chorus Line Inc. to create CL Fashion.
The likely Chapter 11 comes against a backdrop of employee-led protests by Carole Little and Chorus Line workers who have picketed outside the offices of CL’s corporate parent, Levine Leichtman Capital Partners, as well as outside the homes of general partner Arthur Levine and Mark Michelson, CL Fashion’s chief financial officer. The employees charge that CL Fashion owes them monies, amounting to several thousand dollars in some individual cases, for back pay, vacation time, expenses or commissions.
Dismissed employees have not only been organizing pickets and protests, but they have been “auditioning” possible legal representatives as well, according to Natalie Wierzba , vice president of sales and merchandising for CL Fashion’s St. Tropez and Molly Malloy lines, who also said that the employees had already talked to four potential lawyers, among them attorneys who would take up their cause on a contingency basis, and would soon be talking to a fifth attorney.
Meanwhile, according to Wierzba, “Mark Michelson has made calls to customer service, to shipping, trying to recruit some people to come back in as of Monday.” She assumes, she added, that the “intention is to liquidate.... It doesn’t look like there will be any extension [to the Chapter 11 filing].”
Michelson wrote approximately $16,000 worth of his own personal checks to approximately 18 to 20 employees earlier that week to compensate them for expense checks they’d been given that had bounced, Wierzba said.
At press time, phone calls to various CL Fashion principals seeking comment had not been returned.
