Court OKs Frederick's Reorganization Plan From Chapter 11Lingerie retailer Frederick's of Hollywood, known for creating the thong panty and push-up bra, gained approval from U.S. Bankruptcy Court for a reorganization plan to rescue it from Chapter 11.
The approval lets creditors convert Hollywood, CA-based Frederick's debt into equity, making for a better balance sheet and fiscally stronger operations.
The 56-year-old firm's lender group and general unsecured creditors not only will convert debt into stock. Members of the main lenders also will invest. A new revolving credit facility will help inject much-needed cash into support capital and marketing expenditure, continue paying salaries of senior managers and assume the company's current store leases.
Frederick's in July 2000 filed for Chapter 11 bankruptcy protection. It since has worked to open or remodel more than 20 stores, improve its online store at fredericks.com and boost product lines with new introductions in its catalog and 167 stores.
The revamp has won support from Frederick's secured lenders, the unsecured creditors' committee and almost all the retailer's store landlords. The plan takes effect Jan. 7.