Published: Tue, June 13, 2017
Economy | By Melissa Porter

Gymboree files for bankruptcy protection to reduce debt

Gymboree files for bankruptcy protection to reduce debt

The retailer announced the filing, which had been expected, on Monday morning. The Company, which operates as a children's apparel specialty retailer, is represented by Michael A. Condyles of Kutak Rock. In the past year, Sears Holdings Corp. and Macy's Inc. have closed scores of department stores, while chains such as The Limited Stores, The Wet Seal and shoe retailer Payless Holdings have filed for bankruptcy.

Gymboree, based in San Francisco, reported a loss of $325 million last quarter.

Gymboree claims that this agreement will allow it to restructure and refinance itself.

Lower-cost competition from rival chains like The Gap and Children's Place have hurt the company as well, according to Reuters.

Director Liyuan Woo of AlixPartners will take over as Interim Chief Financial Officer as the company searches for a permanent replacement for North, Gymboree said in a statement.

The bankruptcy comes after Gymboree was unable to pay certain bills in recent months. Eventually, it pivoted to include traditional retail stores.

Additionally, Gymboree announced that Andrew North is stepping down as C.F.O. for personal reasons. He was ultimately succeeded by Daniel J. Griesemer. However, the company is profitable: It just has $1.4 billion in debt from a leveraged buyout by Bain Capital a few years ago.

The retailer has more than 1,200 brick and mortar stores under three brands, Gymboree, Crazy 8, and Janie and Jack. The Gymboree line makes up the bulk of its business, with 586 stores and 174 outlets, accounting for 66 percent of its revenue in 2016, according to court papers.

The company's fiscal distress is particularly problematic for mall owners Simon Property Group and GGP, formerly General Growth Properties, which collectively control 35% of Gymboree's US real estate space.

Gymboree is represented by the Kirkland & Ellis law firm, and filed its bankruptcy in Richmond, Va.

Gymboree hopes to receive approval for their plans by September 24.

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