Lenox files for Chapter 11 bankruptcy protection
"Business as Usual," says CEO
Gifts & Decorative Accessories -- Home Accents Today, 11/25/2008 7:02:00 AM
Tabletop and giftware vendor Lenox Group filed for Chapter 11 bankruptcy in the Southern District of New York. The company plans to file a variety of first day motions with the Court that, if approved, would allow Lenox to continue to conduct business without interruption. Lenox will seek Court approval for a new $85 million debtor-in-possession financing facility from its current revolving lender group to pay for ongoing operations such as payroll, materials and normal operating expenses.
Lenox will keep trying to sell its business while in Chapter 11 through a sale process to be approved by the Court. The company and its lenders entered into an agreement that the company's assets will be sold to a new entity formed by the lenders in exchange for cancelling a portion of the company’s secured loans. The agreement is subject to higher or better offers, and will be considered as one offer in a bidding process to maximize value of the company's assets.
"We want to assure our employees, customers, vendors and communities that Lenox is conducting business as usual," Marc Pfefferle, Lenox CEO, said in a statement. “While fundamentally sound, our business has been significantly impacted by economic conditions and excessive debt levels incurred at the time Department 56 purchased Lenox Inc. in 2005." (Department 56 bought Lenox Inc. in 2005 and changed its name to Lenox Group.)
"After exhausting all other possibilities and considering the current state of credit markets and the economy," Pfefferle continued, "we determined that the best way to complete a restructuring of the balance sheet and protect our franchise value was to pursue a sale of the company under Court approval in a Chapter 11 proceeding. This process will give the company flexibility to operate on a normalized basis, dispose of unproductive assets, reduce operating costs and strengthen its balance sheet."
Lenox expects the Over The Counter (OTC) bulletin board to temporarily halt trading in the company's stock pending receipt of additional information on the company's financial condition and reorganization plans. Lenox began trading on the OTC board after being suspended from the New York Stock Exchange in May. Lenox’s principal bankruptcy attorneys are Weil, Gotshal & Manges LLP and its financial advisor is Berenson & Co.
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