Spiegel Declares Bankruptcy in Effort to Survive
The Spiegel Group announced today that it had filed for bankruptcy protection as the cash-starved retailer prepared to make its final defense against a debt crisis that threatens its existence.Spiegel also said it had secured a $400 million credit line from Bank of America, Fleet Retail Finance Inc. and the CIT Group/Business Credit Inc. to help supplement its cash supplies during the reorganization. Its debt problems stem from its efforts begun two years ago to market credit cards to the sub-prime market, which includes consumers with poor credit histories who pay high interest rates.
"During this process, the company expects to continue to provide the same high-quality goods and services as it has in the past," Spiegel said of the bankruptcy proceedings in a statement. "All stores and catalog operations are open and serving customers."
Spiegel will continue to honor gift certificates, merchandise credits and return and exchange policies, the company said. Employee wages, salaries and benefits also are continuing.
First Consumers National Bank, Spiegel's bank subsidiary that issued the credit cards, is not covered under the bankruptcy filings, Spiegel said. FCNB's liquidation is continuing, and the company deactivated credit cards issued by the subsidiary earlier this month.
