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Cache is the latest mall-based retail chain to file for Chapter 11 bankruptcy protection.

Chapter 11 Bankruptcy Protection

The women’s dress and formalwear retailer, which was founded in Miami in 1976, filed for Chapter 11 bankruptcy-court protection in Delaware. In its bankruptcy petition Cache listed its liabilities between $50 million and $100 million, and its assets between $10 million and $50 million.

Jay Margolis, Chairman and Chief Executive of Cache, said the bankruptcy filing was made “with the goal of securing Cache’s future.”

Cache will close some its 218 stores and also renegotiate some of its leases. It has secured an offer from liquidators at SB Capital Group LLC as well as Tiger Capital Group LLC, but these offers might be challenged by higher offers during a bankruptcy auction. There are plans to sell the rights to the name if a buyer is not willing to keep the stores alive.

According to court filings, the company’s expansion during the years between 1999 and 2006 expanded the chain store’s count to 306 but also put more emphasis on sportswear (versus formalwear), thus harming the brand. The company has not been able to turn a profit since 2011.

Salus Capital Partners

Salus Capital Partners is set to provide $22 million in bankruptcy financing. In September Salus became Cache’s lender and provided the retailer with a $30 million credit facility that will mature in 2017. This replaced a line of credit from Wells Fargo.

Cache owes Salus Capital Partners $16.43 million on the prebankruptcy facility in addition to $11.36 million in trade debt. Cache has defaulted on 50 of its leases and owes more than $1 million each to mall landlords Simon Property Group Inc. and General Growth Properties.

Requests in Bankruptcy Court

Cache has filed routine requests in bankruptcy court, including asking for permission to continue paying its 2,512 employees, while also maintaining its customer-recognition programs and bank accounts.

In 2013 the company recorded losses of $34.4 million. Its losses were $32.7 in 2014. Last summer the company’s trade vendors began clamping down and imposing stricter terms for paying bills. In August, the company brought on financial advisers at Janney Montgomery Scott to take a look at options for the company’s future.

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