Legal News

Bankruptcy Wave Topples Steve & Barry?s

By Dan Slater

He comes in waves, but there he is: Master Laird, rider of Big Waves, shredding a heavy. And you know what that means, Loyal Law Blog Readers: It’s bankruptcy time.

As expected, Steve & Barry’s, the clothing company with fashionable clothes priced below $10, filed Chapter 11 today, blaming a liquidity squeeze for its failing fortunes. Here’s the early WSJ story. (Here’s more on the bankruptcy from WSJ’s bankruptcy guru Jeff McCracken and LB alum Peter Lattman.)

According to a report in The Deal (subscription required), Weil Gotshal’s Lori Fife is serving as debtor counsel to Port Washington, N.Y.-based Steve & Barry’s.

The chain’s 276 stores remain open, with gift card, store credits and return policies continuing as is. But 172 corporate and field jobs are being cut, just 1% of the work force. The bankruptcy, if stores are ultimately closed, stands to hurt everyone from Sarah Jessica Parker to the nation’s struggling mall owners, reports the WSJ.

For those LB’ers who don’t shop at Steve & Barry’s, last year SJP launched her exclusive Steve & Barry’s line “Bitten” with an appearance on the Oprah Winfrey Show. (SJP’s “Bitten” manifesto is: “It is every woman’s inalienable right to have a pulled-together stylish, confident wardrobe with money left over to live.”)

Founders and co-CEOs Steve Shore and Barry Prevor said despite the company’s rapid growth during its 23-year history — including same-store sales up 25% the first five months of this year — “this has not been enough … in the current credit and economic environment.” The duo cited its own increased material and fuel costs, as well as higher food and gas and declining home prices affecting its customers.

Full post as published by Law Blog - WSJ.com on July 09, 2008 (boomark / email).