Anna’s Linens Inc. in Costa Mesa filed for Chapter 11 bankruptcy protection on June 14 with the U.S. Bankruptcy Court, Central District of California.
The home goods retailer is also negotiating a sale with DW Partners LP in New York. The asset management firm would become “the stalking horse” bidder, and make the initial bid in a bankruptcy auction sale.
Anna’s Linens has hired Hilco Merchant Resources LLC in Northbrook, Ill. and Gordon Brothers Retail Partners LLC in Boston to manage “store closing sales” should the deal with DW Partners fall through.
Anna’s Linens said in its bankruptcy filings that its liabilities range between $100 million to $500 million. Unsecured claims include $3.9 million owed to Welcome Industrial in Deer Park, N.Y; $3.6 million to Shewak Lajwanti Home Fashions Inc. in Vernon; and $3.1 million to S. Lichtenberg and Co. in New York.
Anna’s Linens generates more than $300 million in annual revenue, according to court documents.
Founder and Chairman Alan Gladstone started the company in 1987 and has overseen its growth to 261 stores in 19 states and Puerto Rico, and about 2,500 employees. Eight stores—San Francisco, San Ysidro, Dallas, Houston, Decatur, Ga., Stone Mountain, Ga., Langley Park, Md. and Rock Hill, S.C.—are set to close this month.
Anna’s Linens filed for bankruptcy in 1993 and emerged from the process in 1994.
In 2002, when it had about 80 stores, it sold 25% of itself to San Francisco-based private equity firm Rosewood Capital for $25 million to open 60 stores and pay down debt.
The founder’s son, Scott Gladstone, was promoted from president to chief executive in January 2014.
Anna’s Linens signed an $80 million credit facility in July with Needham, Mass.-based Salus Capital Partners and White Plains, N.Y.-based Downtown Capital Partners to refinance debt.
The former makes “secured, asset-based loans,” and the latter “invests in and lends to stressed and distressed companies,” according to the firms’ respective websites.