Chapter 11 for London Fog
London Fog Industries announced on Monday that it has filed for Chapter 11 Bankruptcy protection. The store at 2230 Lake Tahoe Blvd. is expected to close in November.
London Fog has 140 stores throughout the United States and Puerto Rico with annual sales of $300 million. There are 110 stores slated for closure. About 1,500 employees nationwide could be affected, including five local employees. The Folsom, Calif., store is the closest outlet expected to remain open.
“We use the store all the time. We buy all of our coats there and send them (to family in) New York, Texas and Burlingame,” said South Shore resident Sandra Quinn, adding that they buy their grandchildren’s coats and snowsuits at the Tahoe store. “It’s like a tradition in our life.
“It’s sad to see it go. There’s really nowhere to shop around here.”
Quinn and her husband, Bill, gathered signatures from about three dozen faithful customers hoping to sway the corporation to keep the South Shore store open.
“I thought it would be worthwhile to speak out, to share the feeling of frustration we have (at losing the store),” Bill Quinn said. “We hope the company will take a second look.”
If the petition had an effect, it apparently was not enough.
“Sometime between Oct. 30 and Nov. 30, it’ll be gone,” said South Shore store manager Beth Bates.
Bates has been aware for about two months that the bankruptcy was likely.
London Fog spokesman Sheldon Jones, of Crawley, Haskins and Rodgers in New York, said that, with liquidation sales, the store should stay open through the end of the year.
The closing of most of the London Fog retail outlets represents a major change in focus for the company. Rather than concentrating on retail operations, the company will shift to wholesale distribution of its brands – including London Fog, Pacific Trails, Black Dot and Towne – in major department stores.
“London Fog Industries’ previous strategy was to compete in the direct retail sector. Substantial resources of time, talent and money were expended on this retail strategy for the past four years,” said William Dragon, Jr., president and chief executive officer, who assumed leadership of the company in March.
“We have reassessed this initiative and have concluded that we should not be competing directly with our retail partners. As well, the company simply has too much debt. We believe that a Chapter (11) proceeding provides an effective base for the restructuring of our debt and the elimination of unprofitable retail stores.”
London Fog has secured a $130 million financing commitment from Congress Financial Corporation to address its liquidity needs in Chapter 11. Bondholders have expressed support for the company’s action and support for a restructuring plan, which is expected to convert a substantial amount of bondholder debt to equity.
London Fog, headquartered in Eldersburg, Md., with offices in Seattle and New York, was established in 1922 and continues to design and distribute quality men’s and women’s rainwear and outerwear.
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