Mervyns Bankruptcy Financing Gets Thumbs Up
Ailing Mervyns, the discount department-store chain that filed for Chapter 11 bankruptcy protection on July 29, has received final approval for its $465 million debtor-in-possession financing plan.
The plan will enable the retailer, based in Hayward, Calif., to pay its employees and its vendors as it reorganizes. The final approval came from the U.S. Bankruptcy Court in Delaware on Aug 26.
The financing plan will be provided by lenders led by Wachovia Finance Capital Corp.
“Our DIP financing provides Mervyns with the liquidity and stability it needs to continue serving our customers and meeting our obligations to vendors,” said Mervyns Chief Executive John Goodman. “We are able to maintain our operations while continuing our discussion with creditors as we focus on emerging from bankruptcy.”
Mervyns, which currently has 175 stores in its chain, mostly in California and Arizona, will close 26 stores in late October or early November. Closing sales began Aug. 28.
Mervyns was founded in 1949 by Mervin Morris, with just two employees at a store in San Lorenzo, Calif. —Deborah Belgum
