Mega store Loehmanns declares Chapter 11 Bankruptcy

Recently, the mega retail clothing outlet chain Loehmanns announced that it would be closing its doors after 92 years of operations and filing for chapter 11 bankruptcy. This is not the first time this scenario has played out however, Loehmanns has filed for bankruptcy protection three times previously. In this circumstance however, Loehmanns has announced that it is indeed prepared to sell its assets to liquidators if needed.

Last month, the executive staff attempted selling off other businesses owned by Loehmanns but received no meaningful bids out of the 39 that were provided.

What is the gameplan now you might ask? Loehmanns has announced that it will be beginning a “wind down and liquidation process” where assets are set to be sold on December 30th, 2013. On the other end of the bidding war, some front runners have emerged in the forms of SB Capital Group, Tiger Capital Group and A&G Realty Partners, which are rumored to be making a $19 million dollar offer to acquire the Loehmanns’ assets.

How could a giant such as Loehmanns come to such a screeching halt? It is a simple matter of being able to support lower prices. Being a wholesaler, Loehmanns could previously undercut smaller boutique stores and provide lower prices. But as the landscape of business changes, smaller companies have been able to offer this same competitive pricing, drawing away from the mass influx of customers Loehmanns needs to stay sustainable.

Although approximate, Loehmanns is said to be selling between $50-$100 millions in assets and approximately $100 – $500 million in liabilities.

Chapter 11 bankruptcy is similar to the large Hostess Inc. shut down earlier this year. The bigger they are, the harder they fall.