Women's specialty retailer Cache announced that it has filed for bankruptcy protection under Chapter 11. The company will continue omnichannel selling as usual, as it seeks a strategic partner.
"We took this action today with the goal of securing Cache's future," said Jay Margolis, Cache chairman and CEO. "Our team has been working tirelessly to implement a turnaround. In a short period of time, we upgraded key stores and closed unprofitable ones; launched a more vibrant and robust e-commerce site where conversion has doubled; and have seen same store comp sales from our 2014 holiday season increase 9.5 percent, with this positive momentum continuing through January. However, the depressed brick-and-mortar retail market, the continued growth of online shopping, and rapidly changing consumer tastes and habits thwarted our efforts. Ultimately, we have not had the time or capital to realize all of the benefits of our hard work."
Cache intends to further reduce its store count by selling or renegotiating current leases.
Cache is also seeking proposals from experienced liquidators to serve as a stalking horse purchaser. The stalking horse agreement would be subject to higher bids and potential going-concern bids at a bankruptcy auction. This is the retailer's way of securing a strategic partner while maximizing recovery.
Cache has been offered $22 million in debtor-in-possession financing from Salus Capital Partners.
Salus Capital has also played a large role in the past year in supporting struggling retailer RadioShack. In January, RadioShack received an unsolicited $500 million loan offer from Salus Capital, if the company agreed to file for bankruptcy. If the loan was accepted, it would have replaced the retailer's existing $585 million asset-backed credit line. To further its stake in RadioShack, Salus also recently accused the retailer of breached covenants on a $250 million term loan, though RadioShack contested the claims. Salus Capital is attempting to get a bigger piece of the retailer's debt in exchange for agreeing to back the company's store-closing plan.
Cache joins the growing list of retailers that have filed for bankruptcy since the start of 2015 including SkyMall and Wet Seal (NASDAQ:WTSL).
-See this Cache press release
SkyMall files for bankruptcy
Wet Seal files for bankruptcy
RadioShack offered $500M in turnaround funding
RadioShack seeks funding; makes turnaround effort
RadioShack defends its balance sheet, discourages implications that it's for sale