Bakers Footwear Files For Chapter 11 Bankruptcy With Debts Of $59.49M

by Tara Arick on October 4, 2012 · 0 comments

in Banking,Bankruptcy

Women’s shoe company Bakers Footwear Group Inc. on Oct. 3 filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Missouri, listing total debts of more than $ 59.49 million and assets of slightly more than $ 41.9 million (In Re: Bakers Footwear Group Inc., No. 12-49658, Chapter 11, E.D. Mo. Bkcy.). Specifically, Bakers has debts of $ 59,498,037 and assets of $41,905,687.

Loans

Bakers CEO, Peter A. Edison, filed a first-day declaration in the Bankruptcy Court indicating that as of the petition date, it operated 216 stores nationwide and employed 459 full-time employees, along with 3,461 part-time employees.

In June, Bakers entered into a $30 million loan with Crystal Financial LLC, which replaced its prior $30 million credit facility with Bank of America N.A. As of the petition date, the unpaid principal balance on the loan from Crystal Financial amounted to $15,976,224.28.

In 2007, Bakers issued $4 million in subordinated convertible debentures to investors, the interest payments on which are due Feb. 15, 2013, Edison said.

Losses

In 2010, Bakers entered into a debenture and stock purchase agreement with Steven Madden Ltd. Bakers sold Steve Madden a subordinate debenture in the principal amount of $5 million with the principal to be repaid in four annual installments beginning Aug. 31, 2017.

Addition to the financing deals, Edison said that Bakers incurred net losses of $ 11 million and $ 9.3 million in fiscal years 2011 and 2010, respectively, which “had a significant negative impact” on Bakers’ financial position and liquidity.

Edison said that as a result of lower-than-planned sales and lower-than-planned inventory receipts, in July the company was not in compliance with the maximum borrowing limits under the terms of its loan with Crystal Financial. Bakers also could not meet its obligations to repay excess amounts to the lender, which constituted events of default under the terms of the agreement.

Despite entering into a forbearance agreement with Crystal Financial, Bakers still was forced to file for bankruptcy, Edison said.

Bakers is represented by Laura Uberti Hughes, David M. Unseth and Brian C. Walsh of Bryan Cave in St. Louis.

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