Gerald Stevens Files for Chapter 11 Bankruptcy
The floral retailer, however, was able to obtain a $7 million line of credit from Bank of America. The funding is subject to the court's approval and will be available for the company's cash requirements.
The line of credit -- coupled with sales from the recent Easter holiday, this week's Professional Assistant Week and Mother's Day -- will allow the company to continue business operations.
"The rapid deterioration of the U.S. economy has negatively impacted our business, and the recent announcement by USA Floral Products of its intention to wind down operations has created substantial uncertainty among our many common vendors," said John G. Hall, president/CEO of Gerald Stevens, Fort Lauderdale, FL. "We believe these events significantly impacted our liquidity, and as a result we had no other choice but to proceed with reorganization."
The company does not anticipate reductions in staff or salaries.
The move comes two months after the company announced the sale of its Florafax floral service and its Calyx & Corolla floral catalog business to its chief operating officer, Andrew W. Williams, for $20 million. The sale was said to provide a way to reduce debt. The company has outstanding borrowing of $32 million under its credit facility.
Gerald Stevens does not expect yesterday's bankruptcy filing to affect the sale, which is expected to close Monday. However, if the sale is not completed by then, the company and Williams can terminate the transaction.
Gerald Stevens has more than 300 floral specialty retail locations in the United States. It also runs an Internet business and National Flora, a floral marketing company with premium-placed advertisements in Yellow Pages directories.