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Hancock Files Chapter 11
Posted by: admin | March 21, 2007
Hancock Fabrics announced today it has filed a voluntary petition for Chapter 11 relief. Its subsidiaries are also filing for the same relief. The company took the action so it can use the reorganization process to improve the company’s operating performance, reduce its secured debt over time, close underperforming locations, and exit Chapter 11.
Hancock has negotiated a consensual $105 million debtor-in-possession financing arrangement with Wachovia Bank, N.A., in which Hancock will gain additional borrowing capacity necessary to operate successfully under Chapter 11. The company is also in the final stages of negotiating an additional loan of up to $17.5 million with another lender.
Yesterday the company announced it was closing 104 stores in addition to 30 store closings it announced on February 8.
Jane Aggers, president and ceo, said, “The process of reorganizing Hancock Fabrics under Chapter 11 is a necessary step to reposition the company for the future. It allows us to focus our attention and resources entirely on further improving our better-performing stores and right-sizing our back-office operations and distribution center. We intend to complete the reorganization as quickly as possible, while taking the actions necessary to preserve value for our creditors, customers, employees, and other stakeholders.”
Hancock has filed a number of “First Day Motions” in the bankruptcy court to support its employees, customers, vendors, and other stakeholders. Among other things, the court filings include requests to continue to pay Hancock employees and to fulfill the needs of the company’s customers as they relate to gift cards, merchandise returns, classes, and other services.
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