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Istithmar company in debt standstill deal

Dubai, November 13, 2010

Loehmann's, a US-based designer brand owned by Dubai investment group Istithmar has a standstill agreement with its largest lenders through November 19, giving the company more time to arrange a restructuring or a bankruptcy filing.

The agreements allow Loehmann's more time to discuss its restructuring alternatives, including a possible prearranged Chapter 11 reorganization, according to a copy of a letter the off-price retailer sent to its vendors.

Loehmann's made so-called forbearance agreements with commercial finance company Crystal Financial and its two largest secured noteholders representing about 70 percent of its notes, the letter said.

A Loehmann's spokeswoman confirmed the details of the letter.

Loehmann's, which opened in Brooklyn in 1921, sells designer brands at steep discounts. It has been unable to meet its debt load even as competitors such as TJX Cos and Ross Stores have reported robust sales.

Under the agreement, the lenders agreed not to exercise or enforce any of their rights against the company through November 19, meaning they will not start pushing to seize assets or force the company into bankruptcy. Loehmann's has a credit line for working capital with Crystal Financial.

The letter was sent after the company failed in late October to exchange its notes expiring next year for those with later maturity dates.

The company said at that time it would not make an October 1 interest payment on those notes that it had deferred because of the exchange and would pass the 30-day grace period its lenders had allowed.




Tags: Istithmar company | debt standstill | Loehmann |

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