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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 8, 1995
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THE CLOTHESTIME, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-12203 33-0469138
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5325 East Hunter Avenue, Anaheim, California 92807
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 779-5881
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(Former name or former address, if changed since last report)
No. of Sequentially Numbered Pages: 7
Exhibit Index on Page 4
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP
On December 8, 1995, The Clothestime, Inc. ("Clothestime") and five of
its subsidiaries, Clothestime Stores, Inc., MRJ Industries, Inc., Clothestime
Acquisition Corporation, Clothestime Investment, Inc. and Clothestime
International, Inc. (collectively, the "Subsidiaries"), filed petitions in the
United States Bankruptcy Court for the Central District of California, Santa
Ana Division, Jointly Administered Case No. SA95-22533JW, assigned to Judge
John J. Wilson, seeking reorganization under chapter 11 of the Federal
Bankruptcy Code (the "Code"). Clothestime and the Subsidiaries are being
operated as debtors-in-possession under the Code.
A copy of the press release issued by Clothestime on December 8, 1995,
reporting the chapter 11 filings and related mattters is filed as an Exhibit
hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
99. Text of Press Release dated December 8, 1995 re: Clothestime
Files Chapter 11; Receives Commitment for up to $40 Million in Financing;
Announces Multi-Faceted Profit-Improvement Program.
[This portion of the page intentionally left blank]
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE CLOTHESTIME, INC.,
a Delaware corporation
Date: December 11, 1995 By: /s/ NORMAN ABRAMSON
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Norman Abramson
President and Chief
Operating Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit Number Description Page
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<S> <C> <C>
99 Press Release Re: Clothestime Files 5
Chapter 11; Receives Commitment for
up to $40 Million in Financing;
Announces Multi-Faceted Profit-
Improvement Program.
</TABLE>
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EXHIBIT 99
NEWS RELEASE
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SITRICK AND COMPANY, INC.
LOS ANGELES/NEW YORK
Contact: Sitrick And Company
Sandra Sternberg
Rivian Bell
Ann Julsen
(714) 779-5881, ext. 2440
OR
Michael Sitrick
(310) 788-2850
FOR IMMEDIATE RELEASE
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CLOTHESTIME FILES CHAPTER 11; RECEIVES COMMITMENT FOR UP TO $40 MILLION IN
FINANCING; ANNOUNCES MULTI-FACETED PROFIT-IMPROVEMENT PROGRAM
ANAHEIM, CALIF.--DECEMBER 8, 1995--The Clothestime, Inc.
(NASDAQ/NNM:CTME) today announced that it and certain of its subsidiaries have
filed for protection under chapter 11 of the Bankruptcy Code. The company also
announced that, through its Clothestime Stores subsidiary, it has received a
commitment from The CIT Group/Business Credit, Inc. for up to $40 million in
debtor-in-possession (DIP) financing.
Concurrently, the company announced a multi-faceted program to improve
the competitiveness and profitability of the chain, including closing
approximately 140 unprofitable or underperforming stores. The company said it
planned to conduct store-closing sales in order to maximize the value of the
inventory at these stores.
John Ortega II, chairman and chief executive officer of Clothestime,
said that after an intensive review of both the current retail environment and
the company's operations, the Board of Directors determined that a major
reorganization of the business was needed--one which would only be accomplished
through a chapter 11 restructuring.
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1875 Century Park East, Suite 950
Los Angeles, CA 90067
(310) 788-2850 Fax: (310) 788-2855
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"We recognized that we must improve every aspect of our operations to
distinguish our product offering and compete effectively in today's retail
environment," he said. "Accordingly, we have implemented a series of actions
which we believe will result in a better selection of merchandise to our
customers at better prices and increased profits and sales."
Norman Abramson, president and chief operating officer of Clothestime,
said these actions include further refinement and enhancement of the company's
vendor-partnership program, as well as a realignment of its merchandising and
marketing strategies.
"However, we also recognize that to accomplish these objectives, we
will have to concentrate our resources on the company's most profitable
operations. As a result, management has undertaken a review of every aspect of
the company's operations.
"Staffing levels, merchandising and the facilities' performances will
be reviewed," he said. "Those stores and facilities that are viable will be
improved. Those that cannot be improved will be sold or closed."
Mr. Ortega noted that neither Clothestime's customers nor its employees
should notice any difference in ongoing operations as a result of the filing.
"As a matter of fact, as far as the company's customers are concerned,
we expect to be able to provide them with as good or better a selection of
goods and services as before the filing," he stated.
"Daily operations will continue as usual, stores will remain open and
transactions which occur in the ordinary course of business will go on just as
usual," he stated. "Paychecks will be issued at their regular times, as if no
proceeding had been filed. Although there will be downsizing, certain of these
actions would have been taken irrespective of a chapter filing," Mr. Ortega
added.
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Mr. Abramson said that, while the law precludes Clothestime from paying
its vendors for goods and services received prior to the filing until a
reorganization plan becomes effective, invoices for goods and services received
after the filing are afforded administrative priority status.
"We plan to contact our key vendors as soon as possible and elicit
their support," he said. "With the DIP financing commitment from The CIT
Group/Business Credit, Inc., the cash we have on hand and revenue from ongoing
operations, we will have adequate liquidity to purchase the goods and services
we need. We look at our vendor relationships as partnerships and feel confident
that the vast majority of our suppliers will recognize the value of doing
business with us long term."
Mr. Ortega said that the current retail environment is different than
any he has ever seen in his 25 years of retail business experience. "Marginal
locations won't survive," he said. "By taking this action, we intend to be a
survivor."
Mr. Abramson added, "The Clothestime management team is well aware of
what we have to do to not only survive, but to grow and thrive. We are
optimistic that the steps we have taken and those we are taking are in the
long-term best interest of all of the company's constituents, including its
vendors, shareholders and employees."
Clothestime employs approximately 4,100 people in 537 retail apparel
stores in 21 states and Puerto Rico. Additionally, approximately 320 are
employed at the company's Anaheim Service Center. The company and certain of
its subsidiaries filed chapter 11 petitions in the U.S. Bankruptcy Court in the
Central District of California in Santa Ana.
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