Goody’s Family Clothing, Inc., based in Knoxville and with a location in Brownwood, announced Monday that it has filed for Chapter 11 bankruptcy protection and hopes to reorganize its operation. Part of that reorganization is the closing of 69 underperforming stores, including five in Texas, according to the company’s Web site.
Goody’s, which is privately held, currently operates 355 stores in 20 states. Its location in Brownwood, at 509 W. Commerce in Commerce Square, is not among those the company says it will close in Texas. The stores scheduled for closing are located in Texarkana, Killeen, College Station, Temple and Odessa.
When contacted Tuesday afternoon, Brownwood store manager Melissa Mullins said that she would not be able to comment for this story.
Paul White, Goody’s recently appointed chief executive officer, said he hopes the filing will help the stores create a more stable operation.
“While Goody’s has a very successful 55-year heritage and we serve an important market niche, we have recently faced considerable challenges. After careful analysis, we made the decision to restructure the business through a Chapter 11 filing in order to streamline operations, refocus on our core business, and strengthen our balance sheet so that Goody’s is better positioned for the future,” he said in a press release on the company’s Web site. Calls to White were not returned before press time.
Gary Yiatchos, senior vice president and chief marketing officer, faxed letters to area media stating that the company had filed for bankruptcy protection on Monday.
“The company made the extremely difficult decision to file a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code for the District of Delaware on June 9, 2008,” his letter said. “This filing gives our company the time and resources necessary to overcome our financial challenges while we continue normal operations.” A call to Yiatchos’ office was referred to White.
“The decision to close a large number of stores and further consolidate operations was a difficult one and we regret the impact that this will have on some of our employees. However, we believe these are necessary steps as we work to improve the business and return to profitability,” White said.
According to the bankruptcy filing, Goody’s has asked for an emergency motion that would allow it to pay employees at its stores for work performed prior to the filing.
In a letter to customers on the company’s Web site, White emphasized that most stores will be open for business as usual.
“It is important for you to understand that Goody’s is not going out of business. While we expect the majority of our stores will remain open and will continue to operate without interruption, we plan to close some locations over the coming weeks,” the letter said.
Chapter 11 of the U.S. Bankruptcy Code allows companies and individuals to reorganize themselves, with the goal of allowing the business to remain open and for it to pay its creditors over time.