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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):
SEPTEMBER 3-13, 1999
COMMISSION FILE NUMBER 0-15934
Jay Jacobs, Inc.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Washington 91-0698077
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
1530 Fifth Avenue
Seattle, Washington 98101
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(206) 622-5400
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS.
On September 3, 1999, Jay Jacobs, Inc. (the "Company") and its wholly owned
subsidiary, J.J. Distribution Company, filed their respective voluntary
petitions under Chapter 11 of the United States Bankruptcy Code (United States
Bankruptcy Court for the Western District of Washington at Seattle, the
Honorable Thomas T. Glover, consolidated for administrative purposes only under
Case No. 99-10130) in order to address obligations associated with the Company's
recent financial difficulties and related liquidation efforts. On September 10,
1999, Judge Glover entered the Interim Order (1) Authorizing
Debtors-In-Possession to Incur Postpetition Secured Indebtedness, (2) Granting
Security Interests Pursuant to 11 U.S.C. Section 364(c), (3) Modifying Automatic
Stay, and (4) Setting Final Hearing, approving interim debtor-in-possession
financing of up to approximately $4,842.340.00 in the aggregate under the budget
in connection with the credit facility obtained from FINOVA Capital Corporation
("FINOVA"). On September 13, 1999, Judge Glover issued the Order Approving
Assumption of Inventory Liquidation Agreement, (B) Related Inventory Liquidation
Sale Procedures, (C) Related Rejection of Certain Nonresidential Real Property
Leases, and (D) Other Relief, granting the Company the authority to conduct
going out of business sales in all of its stores.
A copy of the Company's press release announcing its bankruptcy filing is
attached as an Exhibit to this filing. The Company provided a copy of its FINOVA
credit facility in connection with an earlier SEC filing.
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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 thereunto duly authorized.
JAY JACOBS, INC.
Registrant
9/27/99 /s/ William L. Lawrence, Jr.
- -------------- --------------------------------------------
Date William L. Lawrence, Jr.
Executive Vice President & Chief Financial Officer
(Principal Executive, Financial, and Accounting Officer)
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PRESS RELEASE
JAY JACOBS, INC. ANNOUNCEMENT
FOR IMMEDIATE RELEASE FOR MORE INFORMATION CONTACT:
September 3, 1999 CFO, William L. Lawrence, Jr.
(206) 622-5400 (Ext. 217)
Bankruptcy Counsel (206) 467-8429
September 3, 1999 - SEATTLE, WA. Jay Jacobs, Inc. (OTC: JAYJ), the
Seattle-based specialty apparel chain retailer for men and women, announced
today it has filed (along with its subsidiary, J.J. Distribution Company) a
voluntary petition under Chapter 11 of the United States Bankruptcy Code (United
States Bankruptcy Court for the Western District of Washington at Seattle, the
Honorable Thomas T. Glover, Case No. 99-10130) to conduct an orderly liquidation
of its assets. In connection with the filing, the Company has sought authority
to conduct a storewide inventory liquidation, following which it currently is
contemplated that the leases for its 114 stores in 22 states will either be
rejected or assigned and store employees will be laid off.
To assist the Company with the liquidation process, the Company has
negotiated financing with its principal, prepetition lender, FINOVA Capital
Corporation, to fund aspects of the orderly liquidation. The liquidation will be
overseen by William L. Lawrence, Jr., the Company's Chief Financial Officer, in
conjunction with a core liquidation team of corporate office employees. "The
decision to shut down our business was extremely difficult to make. The layoffs
of employees are a regrettable outcome of these events. We so hoped to keep
everyone gainfully employed. Until the very end, we were actively working with
various investors to achieve a successful reorganization. Unfortunately, a deal
could not be put together given the time constraints involved, the significant
financial pressures, and the situation with our lender. As a result, a Chapter
11 filing became the only viable option," Lawrence said.
Faced with this recognition, on Friday, August 27, 1999, the Company
laid off 54 employees at its corporate headquarters and distribution center. The
Company has also requested that the Bankruptcy Court enter an order rejecting
the Company's employment agreement with Rex Loren Steffey, President and Chief
Executive Officer, whose services will not be required in a liquidation
scenario.
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"It is sad to see the apparent end of this longstanding Seattle
institution. The Company worked very hard to negotiate a transaction with a new
investor, but a Chapter 11 filing ultimately was required due to lack of funds
and the lender's unwillingness to continue to fund operations. Faced with this
unfortunate situation, the Company will make every effort to shut down its
operations in a dignified and efficient manner assuming that an investor
transaction does not immediately materialize in the Chapter 11 case," said Mark
Charles Paben of Preston Gates & Ellis LLP (701 Fifth Avenue, Suite 5000,
Seattle, WA 98104), bankruptcy counsel for the Company. Paben was also lead
bankruptcy counsel to the Company in its previous Chapter 11 case filed in 1994.
Information about the Company's filing may be obtained by calling its bankruptcy
counsel at 206-467-8429.
The Company was founded in 1941. Founder Jay Jacobs resigned as
Chairman of the Board in June 1997 and as a board member in November 1997. By
the late 1980s, the Company operated approximately 300 stores nationwide. In the
early 1990s, however, it suffered from increased competition and expansion
costs, leading to bankruptcy in May 1994. After closing numerous stores and
shifting focus, the Company emerged from Chapter 11 after confirmation of its
plan of reorganization the following year. In October 1995, the Company operated
153 stores. Since confirmation, however, the Company faced generally declining
sales, net store closures, and a shortage of capital. In December 1997, the
Bankruptcy Court approved a recapitalization as a modification to the 1995
reorganization plan, but liquidity problems escalated from October 1998 forward.
Concerted efforts to develop viable alternatives for the Company
continued up to the time of the bankruptcy filing. "If there are any
opportunities to restructure the Company even after the filing, we will pursue
them," Lawrence said.
ALL FORWARD LOOKING STATEMENTS MADE BY THE COMPANY INVOLVE MATERIAL
RISKS AND UNCERTAINTIES AND ARE SUBJECT TO CHANGE BASED ON FACTORS BEYOND THE
COMPANY'S CONTROL. ACCORDINGLY, THE COMPANY'S FUTURE PERFORMANCE AND FINANCIAL
RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN ANY SUCH
FORWARD-LOOKING STATEMENTS. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DESCRIBED IN THE COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE COMPANY DOES NOT UNDERTAKE TO PUBLICLY UPDATE OR REVISE ITS FORWARD-LOOKING
STATEMENTS EVEN IF EXPERIENCE OR FUTURE CHANGES MAKE IT CLEAR THAT ANY PROJECTED
RESULTS EXPRESSED OR IMPLIED THEREIN WILL NOT BE REALIZED.
