Goody's to File for Chapter 11

Knoxville, Tenn. Goody's Family Clothing confirmed that it has filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. The company said it is focused on executing a comprehensive corporate restructuring plan and will continue to operate the business without interruption during the reorganization process.

Goody's has secured a commitment for $210 million in debtor-in-possession (DIP) financing to supplement its working capital and provide adequate liquidity while it works to reorganize the business. This financing includes $175 million in DIP financing under a revolving credit facility from General Electric Capital Corp., $15 million in DIP financing under a term-loan facility from GB Merchant Partners, LLC, and $20 million in DIP financing under a junior term-loan facility from PGDYS Lending LLC.

Paul White, Goody's recently appointed CEO, stated, " After careful analysis, we made the decision to restructure the business through a Chapter 11 filing in order to streamline operations, refocus on our core business, and strengthen our balance sheet so that Goody's is better positioned for the future. Having been in retail for over 30 years, I am excited by the potential at Goody's and believe that by taking the right actions now, this business can move forward effectively.”

In his statement, White said that Goody’s plans to close 69 underperforming stores, consolidate its distribution centers by closing one facility in Russellville, Ark., significantly reduce expenses, and create a more appropriate capital structure.