Pillowtex Files for Bankruptcy
DALLAS (AP) _ Textiles maker Pillowtex Corp. said Tuesday it has filed for bankruptcy protection from creditors to gain financial flexibility and improve profitability.
Pillowtex, which makes towels and pillows under the Royal Velvet, Fieldcrest and Cannon brands, said last week it was in default on $650 million in secured credit and was considering bankruptcy.
The Dallas-based company said Tuesday that it filed a Chapter 11 petition in the U.S. Bankruptcy Court in Delaware.
Pillowtex said it has received a commitment for $150 million in debtor-in-possession financing from lenders led by Bank of America to continue daily operations.
The company said it will continue paying and providing benefits to employees and will honor existing customer-related practices. Bankruptcy law gives special protection for creditors and employees who provide goods or services to a company that has filed for protection.
``We are committed to using the breathing room provided under Chapter 11 to implement a strategic plan designed to ensure the long term viability of our company,″ chairman Ralph La Rovere said in a statement issued by the company.
The company has gone through management changes, including the October resignation of chairman and chief executive Charles M. Hansen Jr., who owns about 17 percent of the company’s stock. La Rovere, a longtime J.C. Penney Co. Inc. executive, replaced Hansen as chairman, and the company is looking for a chief executive.
Pillowtex shares were untraded Tuesday on the New York Stock Exchange.
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