Wry and popular clothing and accessories retailer The J. Peterman Co., Lexington, KY, will be allowed to operate through Feb. 12 under a $1.96 million loan from a primary creditor.
Lawyers for J. Peterman finalized the deal Tuesday, a day after the company filed for U.S. Bankruptcy Court protection. In papers submitted as part of the Chapter 11 filing, founder John Peterman listed assets of $35 million and liabilities of $40 million. The next hearing on the case is scheduled for Feb. 8. Published reports indicated that Peterman was considering selling all or part of the company to outside investors.
Peterman’s decision to file for bankruptcy ultimately was prompted by financing challenges coupled with an excessive year-end inventory problem, which in part contributed to the company’s liquidity crisis. Just 10 months ago, the cataloger was enjoying significant success with exclusive rights to market a costume jewelry replica of the “Heart of the Ocean” necklace worn by Kate Winslet in “Titanic” as well as clothing and actual props from the movie. At that time, things were clearly different for the company, which had plans to open 50 new retail stores over a five-year period.
In a candid interview from his Lexington office, company founder Peterman confirmed for DM News that many other products besides the necklace sold well throughout 1998, but he made it clear the company wasn’t dealing with a product or merchandising problem.
“It was not a store problem and it was not a retail problem,” he said. “The problem, as [everyone] well knows, is that the catalog industry as a whole had gone soft in late October and November — and for us, even though we had an aggressive plan, we ended up missing our goal.”
Peterman, 57, also acknowledged many decisions were made that played a role in the company having to file for bankruptcy.
“We did a number of things that contributed to it, and in hindsight we overcirculated. We prospected too deep. We also had purchased inventory for the aggressive plan, but some of our planned major retail openings were delayed by two to three months because of inability of the landlords to meet their own goals for the promised dates,” he said, which included a store in New York’s Grand Central Terminal. “When you put it all together, you end up with a significant liquidity crisis.”
The company worked late last year to refinance the company with existing investors and additional outside funding, he said, “but that fell through as late as two weeks ago.”
Under motions granted by U.S. Bankruptcy Judge William Howard, the company will be able to pay its 500 employees, pay $235,000 owed to United Parcel Service, Atlanta, and process returned and exchanged marchandise that has been accumulating since the holidays.
Peterman, a former minor league baseball player and marketing consultant, first opened for business in 1987, selling vintage duster coats through ads in the back of The New Yorker and The Wall Street Journal. Over the years, he has enjoyed a quirky popularity and often was the target of satirical verbiage on NBC’s “Seinfeld.”