Fruit Of The Loom Files For Chapter 11 Reorganization
Fruit of the Loom Ltd., Chicago, has
announced that it and certain of its U.S. subsidiaries have filed voluntary petitions with U.S.
Bankruptcy Court for the District of Delaware to reorganize under Chapter 11 of the U.S. Bankruptcy
The company said that it had initiated the reorganization to obtain working capital and implement a financial and operational restructuring.
Fruit of the Loom’s foreign subsidiaries are not part of the filing.
As part of the reorganization, Bank of America N.A., has agreed to provide a new $625 million secured debtor-in-possession (DIP) credit facility. Fruit of the Loom said that the DIP facility would ensure that it has the short-term capital necessary to continue normal day-to-day operations such as the purchase of materials and inventory and the payment of suppliers and employees.
Dennis S. Bookshester, acting CEO, Fruit of the Loom, stated: “The Fruit of the Loom brands are renowned around the world. The Chapter 11 filing is the first step in our effort to address the challenges facing the company and protect the brand.
“We are confident that restructuring our operations and capital structure will enable Fruit of the Loom to emerge as a stronger company in the competitive basic apparel industry, and continue to build our reputation for producing quality apparel.”
“Our vendors are our partners, and we feel confident that the vast majority of our suppliers will recognize the value of doing business with us long term,” said Bookshester.
The company said that its Chapter 11 filing should have little impact on customers and employees. The company has sought and expects to receive the Court’s approval to pay employee salaries, wages and benefits without interruption.
According to Fruit of the Loom, the DIP financing will enable the company to pay for the post-petition delivery of goods and services. It will also continue to build the inventory necessary to meet the seasonal demands from its customers.