Channel Home Centers Inc. filed for protection under Chapter 11 in U.S. Bankruptcy Court in Newark, N.J., yesterday and announced it will sell or close its do-it-yourself home-improvement stores in the Baltimore-Washington area.
Channel's 11 Maryland stores -- seven of which are in the Baltimore area -- will be put up for sale as part of the reorganization, said Sandra Sternberg of Sistrick and Co., Channel's public relations company.
Managers at Channel stores, who as late as 7 p.m. yesterday had not heard of the company's bankruptcy filing, were to be told of the company's plans later last night by Channel executives, Ms. Sternberg said.
The managers, in turn, are to inform their workers today, she said.
Channel's Maryland stores have about 500 employees, Ms. Sternberg said.
Channel, owned by the closely held Channel Acquisition Co., was acquired from W. R. Grace & Co. through a management-led leveraged buyout in November 1986.
Last year, the company closed 18 Texas stores opened under Grace's ownership. The continuing cost -- in rents, taxes and other items -- of maintaining those closed stores totaled more than $20 million last year, the company said.
Channel said it is reorganizing to focus on its core markets in New Jersey and the Philadelphia area and that General Electric Capital Corp. will provide $145 million in "debtor-in-possession financing" to continue its operations.
GE Capital and W.R. Grace are two of the retailer's major creditors, Dow Jones New Service reported yesterday. Channel owes GE Capital $268 million and Grace an unknown amount.
Channel Home Centers Realty Corp., a wholly owned subsidiary of Channel Home Centers Inc., also is part of the Chapter 11 filing, though the parent, Channel Acquisition Co., is not, Dow Jones reported.
"Increased competition, particularly in the New York metropolitan area, from retailers such as Home Depot Inc., is said to have put a crimp in Channel's ability to pay off its debt," Dow Jones said.