Department Store Chain Files for Chapter 11 Bankruptcy
RICHMOND, Va. (AP) _ Miller & Rhoads Inc., a century-old regional department store chain battered by creditor claims, filed Friday for Chapter 11 bankruptcy protection in a reorganization effort described by the firm’s president as ″a positive step to strengthen the company.″
John E. Stokley, president of the Richmond-based chain of 15 department stores, said the bankruptcy filing will allow the company to continue business as usual.
Under Chapter 11 of the federal bankruptcy code, a company can function under court protection while it devises a way to pay the bills.
Stokley said there were no immediate plans to close or sell stores or to make major changes within the company.
He said the decision to declare Chapter 11 bankruptcy was triggered when an attempt to sell two stores in Roanoke and Lynchburg failed.
Sale of the stores would have provided some relief from cash-flow problems that have steadily worsened at Miller & Rhoads. The 104-year-old company has been besieged by lenders, at least 15 of whom have filed lawsuits.
Lawyers representing creditors said payments of claims have slowed or stopped recently.
Stokley said the bankruptcy filing will allow the company to buy merchandise for the fall season, even though the company will have to continue to pay cash for much of its goods.
The company does not have a target date for emerging from bankruptcy, Stokley said.
Last December, then-president and chief executive officer Robert J. Rieland left the chain. Rieland was hired in April by the company’s chief competitor, Thalhimer Bros. Inc., as president and CEO.
In May, M&R’s principal owner, Philadelphia developer Kevin F. Donohoe, acknowledged the company had a cash-flow problem. But said the chain was sound, would continue renovations at existing stores and would build six more stores.
Donohoe led a $65 million debt-financed takeover of the company in 1987. He controls his interest in the chain through KFD Stores Co., the retail arm of The Kevin F. Donohoe Cos., a diversified real estate conglomerate.