Retailer has until Jan. 31 to decide to close stores

August 10, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Most landlords have agreed to give Merry-Go-Round Enterprises Inc. until Jan. 31 to decide how many more of its 1,300 stores to close as it tries to reorganize under bankruptcy proceedings.

There's one condition, though: The Joppa-based fashion retailer can't shut stores owned by certain landlords between Sept. 18 and Dec. 31. That way, mall operators won't have unexpected vacancies for the important holiday shopping season.

The agreement, disclosed in filings in U.S. Bankruptcy Court in Baltimore, increases the likelihood that Merry-Go-Round's bankruptcy proceedings will extend into 1995.

Merry-Go-Round officials were not available for comment yesterday.

Companies operating under bankruptcy rules can break leases with less penalty than they might incur otherwise. But they must decide which stores to close within a deadline specified by the court.

Merry-Go-Round's deadline was yesterday. The retailer had asked for more time, but several mall owners objected. The compromise extending the deadline -- but with a ban on breaking certain leases before Christmas -- was reached through negotiations between the company and landlords over the last several weeks.

Not all landlords have agreed, but several major mall operators are on board, including Pyramid Companies, DeBartolo Properties Management Inc., Richard E. Jacobs Group Inc. and Equitable Life Assurance Society of the United States.

Additional landlords are expected to join the agreement before the end of the month, when U.S. Bankruptcy Judge E. Stephen Derby is expected to formally approve it.

Merry-Go-Round, forced into bankruptcy by poor sales last winter, already has closed more than 100 stores.

It continues to lose money, as indicated by its unaudited financial results for June, also disclosed in court filings.

Not counting lawyers fees, other reorganization costs and an income tax benefit, Merry-Go-Round lost $6.66 million for the month ended July 2, on $69.61 million in revenue. Its net loss for the month was $6.97 million; for the first five months of its fiscal year the net loss was $39.14 million.

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