HomePlace latest to file Chapter 11

By Andrea Lillo -- Home Textiles Today, 1/22/2001 12:12:00 PM

MYRTLE BEACH, SC — Citing disappointing holiday sales caused by a weakening U.S. economy, problems stemming from a new computer system implemented in third quarter 2000, and the inability to secure alternate financing sources, HomePlace of America voluntarily filed Chapter 11 last week in Delaware.

The news represented another blow to vendors, which have watched Strouds file Chapter 11, Montgomery Wards close its doors and Bradlees liquidate, all within the last six months.

Placing number 19 on Home Textiles Today's Top 50 Home Textiles Retailers last year, HomePlace hopes to improve its overall operations with the financial restructuring. It announced that it will close 38 underperforming stores, which will undergo liquidation within the next few weeks. The company also estimated approximately 1,500 workers would be impacted by the closings, with eligible employees being offered transfers to other stores where possible.

Daily operations at the remaining 84 stores and three distribution centers will continue as usual.

The company also said that it has received a commitment from a group of lenders led by Fleet Retail Finance for $150 million in debtor-in-possession financing.

"With our current liquidity and the DIP financing, we believe we will have more than sufficient financial resources necessary to operate our business and emerge from reorganization as a major force in the home furnishings industry," said Greg Johnson, president and ceo. "We anticipate that the vast majority of our suppliers will recognize the value of doing business with us long term."

With the recent struggles of Strouds and HomePlace, said Joan Bogucki, vp, research, Wedbush Morgan Securities, Bed Bath & Beyond and Linens 'N Things "stand to benefit because they are all in a similar market. Both of these are competitors on a national basis."