Converse Files Chapter 11
Jan. 22, 2001
NORTH READING, Mass. (AP) _ Sneaker maker Converse Inc. filed for bankruptcy protection and plans a restructuring that would include closing its three North American production plants that employ about 1,000 people while shifting production to Asia.
The 97-year-old company said Monday in announcing the filing that it plans to become exclusively a licensor of Converse-brand products.
``This was a difficult but absolutely essential action for the future of the company and all of its stake holders,'' Converse chief executive Glenn Rupp said in a statement.
The company plans to close its plants in Lumberton, N.C., Mission, Texas, and Reynosa, Mexico by March 31. A distribution facility in Charlotte, N.C., will not be affected by the restructuring, said Converse spokesman John Burke.
Burke said the company is asking the U.S. Bankruptcy Court to provide ``appropriate severances'' for employees as part of its filing under Chapter 11 of the federal bankruptcy laws. Such filings allow a company to continue operations and keep creditors at bay while a financial reorganization plan is developed.
Converse said it has enough financing to continue operations during the restructuring.
The company has filed a motion with the bankruptcy court seeking approval of an agreement to make Global Brand Marketing Inc. the licensee for Converse-brand footwear in the U.S.
It said it had also agreed to sell its North Reading headquarters building for $15.1 million to reduce debt.
According to the company's web site, Converse's endorsers include NBA players Karl Malone of the Utah Jazz, Ron Artest of the Chicago Bulls and Brevin Knight of the Cleveland Cavaliers.
The company, which was facing a Jan. 31 deadline to satisfy its creditors, missed a $25 million interest payment in June and had more than $183 million in debt in July,
Some creditors were asking for full payment of principal and interest.
On the Net:
Converse site: http://www.converse.com