The company seeks protection
By Rick Daysog
under Chapter 11, pledges to continue
business as usual
Star-BulletinLiberty House Stores, Hawaii's largest and oldest department store chain, filed for bankruptcy protection this morning. The company filed for Chapter 11 reorganization in federal Bankruptcy Court downtown, listing assets of $284.2 million and liabilities of $248.4 million.
Liberty House becomes the largest Hawaii company to file for bankruptcy reorganization, surpassing Hawaiian Airlines which filed for Chapter 11 in 1993, with assets of $125 million and liabilities $320 million.
Hawaiian Air later emerged from the reorganization.
The long-rumored move comes after Liberty House announced in February that it was laying off 162 workers and had eliminated another 300 jobs through attrition. The company said today that it actually laid off 136 workers last month.
Liberty House said the reorganization will allow Liberty House to continue operations while it restructures its debt.
"We're going to be operating as usual," said Jean Dickinson, a Liberty House spokeswoman.
"Liberty House is not going out of business."
Dickinson said the company does not plan additional layoffs and will not close any of its department stores. She also said that there are no plans to sell the company.
The retailer reportedly held talks last year with Cincinnati-
based Federated Department Stores Inc. but those negotiations broke down, according to sources.
Like many local retailers, Liberty House has been hard hit by the weak isle economy, the drop in spending from Japanese tourists and increased competition from mainland-based retailers.
Several local companies like Hawaiian Air and several mainland retailers like Macy's have gone into bankruptcy reorganization but later emerged, Dickinson said.
"Hopefully, when we come out of this we will be stronger than ever," she said. "Liberty House hopes to be here another 150 years.
According to a schedule of creditors filed with the bankruptcy petition, the company owes about $3.8 million to various vendors and suppliers. The largest creditors include:
Polo Ralph Lauren Corp. which is owed $307,561;
Founded in 1849, Liberty House is a unit of Illinois-based JMB Realty Corp., which acquired the department store chain when it bought out then parent Amfac Inc. in 1988. The company currently operates 11 department stores and 25 resort and specialty shops.
During its peak in the early 1990s, Liberty House boasted annual sales of about $400 million but results have fallen during the past several years, analysts said.
Marty Plotnick, president of Creative Resoures Inc., said has "not awakened to the changing market place" and has not adapted to the increased competition in Hawaii's retail market during the past several years.
Plotnick said the company's recent decision to focus on local consumers "was too little and too late."
"I can't believe it," said retail analyst Stephanie Sofos.
"I'm very surprised. There is no question that sales are down but it is my understanding they are still good and above the national average."
She said that perhaps it is the performance of the 25 resort shops that "is dragging them down ".
Dickinson said the company is in the process of notifying its 3,800 employees.
Sales clerks at the Ala Moana Center Liberty House this morning said they heard about the company filing for Chapter 11 bankruptcy filing from worried customers.
Ala Moana store employees had a meeting before the store opened its doors this morning, but they were not told about the court action.
The court filing came earlier than expected and only store managers were told this morning, said Dickinson.
She said a written statement was being prepared, assuring employees that no more layoffs would be occurring.
Clerks at Ala Moana said they thought the current Liberty House sale was going well and were shocked at the news.
One long-time customer said the news made her sad.
Star-Bulletin reporters Richard Borreca and Jerry Tune
contributed to this report.
