Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, February 27, 1992 TAG: 9202270102
SECTION: BUSINESS PAGE: B5 EDITION: METRO
SOURCE: Associated Press
DATELINE: NEW YORK LENGTH: Medium
FIVE-AND-DIME CHAIN SEEKS PROTECTION
Another major retailer fell victim to the recession Wednesday when five-and-dime operator McCrory Corp. filed for Chapter 11 Bankruptcy Court protection from creditors.The move had been expected. McCrory - which operates about 820 stores in 39 states under a variety of names, including a G.C. Murphy Co. store in Vinton, Va. - failed to make a scheduled debt payment two weeks ago.
In its petition, McCrory cited pressure from banks to repay some of its heavy debt early and a money crunch caused by the "continuing depression in the nation's retail markets."
McCrory listed assets of $672 million and liabilities of $543 million. It said the company's outstanding debt totaled about $223 million - more than 85 percent not due until 1995 at the soonest.
The company said in a news release that it had lined up $100 million in financing to continue operating. It said the company expected to emerge from bankruptcy court "as an even stronger and more valuable business enterprise."
Under Chapter 11, a company gets a reprieve from debts while working out a way to pay bills and stay in business.
McCrory, based in York, Pa., is controlled by flamboyant corporate financier Meshulam Riklis. In its petition, McCrory said it was canceling a contract that paid Riklis more than $2.9 million annually - the "great bulk" of his salary as the company's chief executive.
McCrory attorney Brad Eric Scheler said Riklis would stay on as McCrory's chief executive, but a new compensation deal would be drawn up.
McCrory's Christmas was so poor that the retailer fell behind in payments to suppliers. Robert Spencer, chief executive of McCrory's stores division, met with vendors in January in an effort to win their support.
The Chapter 11 filing stemmed largely from bank demands that $75 million in debt securities be paid by July - two years ahead of scheduled maturity, McCrory said. McCrory missed a Feb. 15 payment on $3.37 million in debt securities.
McCrory also said the recent surge in bankruptcy filings by retail companies has made it harder to get credit.
The company's stores unit operates the G.C. Murphy, J.J. Newberry, H.L. Green and S.H. Kress outlets, some of the oldest names among the chains of dime stores that once dotted many downtowns across the nation. McCrory employs more than 17,000 people, not counting thousands of seasonal workers, it said.
The company announced plans in December to close nearly a quarter of its 1,030 variety stores, letting 2,000 employees go in the process.
The stores lost about $16 million in the first nine months of 1991, contributing to an overall loss of $42.3 million during the year. Sales totaled $960.7 million for the first nine months of 1991, down from $1.05 billion in the year-ago period.
At the meeting with suppliers, Spencer predicted McCrory would post sales of $1.14 billion for 1991.
\ RETAILERS IN BANKRUPTCY COURT
McCrory Corp.
R.H. Macy & Co. Inc. Federated Department Stores Inc.
Allied Stores Corp.
Carter Hawley Hale Stores
Ames Department Stores
Hills Department Stores
Revco D.S. Inc.
Zale Corp.