Published: Mon, June 12, 2017
Money | By Armando Alvarado

Gymboree files for Chapter 11 bankruptcy protection

Gymboree files for Chapter 11 bankruptcy protection

The company's announcement did not include any plans for store closings.

Children's clothing chain Gymboree filed for Chapter 11 bankruptcy Sunday to slash debts and close hundreds of stores across the U.S.

Gymboree is represented by the Kirkland & Ellis law firm, and filed its bankruptcy in Richmond, Va.

The company employs more than 11,000 workers. The retailer said it hopes to slash $1 billion of its $1.4 billion in debt and to win approval for its plan by September 24.

In January it announced that CEO Mark Breitbard would be stepping down from that position, although he remained with the company as chairman.

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The filing is supposed to reduce Gymboree's debts by at least $900 million, according to CNBC.

James Mesterham, Gymboree's chief restructuring officer, said the retailer was hurt by lower-cost competition from Children's Place and Gap, which have less debt financing.

The operator of Gymboree, Janie and Jack and insane 8 stores joins a growing list of specialty retailers and department stores that have closed thousands of locations or filed for bankruptcy this year as consumers shift toward online shopping. The company opened its first store in 1986 and now has stores across the US and overseas.

Bain launched a global expansion aimed at overtaking rivals such as Carter's and GapKids, but Mesterharm said the chain failed to achieve the levels of growth it had anticipated. Last week, Ascena Retail Group Inc., which owns brands such as Ann Taylor, said it would close more than 250 stores over the next two years, and could close an additional 400 locations if the company could not negotiate "specific rent negotiations" with landlords.

"Thus, the risk of default, including the potential for a distressed exchange-type restructuring, is very high", the March report said.

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