London Fog preparing to emerge from bankruptcy

Lawyer says action will come next week

April 11, 2001|By BLOOMBERG NEWS

WILMINGTON, Del. - London Fog Industries Inc., the maker of its namesake raincoats and outerwear, is set to emerge from bankruptcy protection next week after shedding more than $100 million in debt, a lawyer for the company said yesterday.

London Fog filed for bankruptcy protection in September 1999 after an aggressive plan to open retail stores hurt profit.

The Seattle-based company, which formerly had its headquarters in Eldersburg, Md., and a factory in Baltimore, has since reorganized, closing 119 stores, mostly factory outlets, company officials said in February.

Under the company's Chapter 11 reorganization plan, bondholders will swap $111 million in claims for about 96 percent of the company's reshuffled shares, said Kelley Cornish, a New York-based bankruptcy attorney representing London Fog. Other creditors are to get the remaining 4 percent of the stock.

"Barring any appeals, the plan will go into effect April 17, and we'll emerge from bankruptcy," Cornish said.

The company, which has only 35 outlet stores remaining, plans to focus more on wholesale and licensing arrangements for its brands, including Pacific Trail outerwear, Bill Dragon, London Fog's president and chief executive, said in February.

Founded in 1922, closely held London Fog ran into trouble when it launched a 1997 expansion campaign, opening seven superstores to push its trench coats and outerwear. As part of its reorganization, the company has shifted away from retailing, officials said in February.

U.S. Bankruptcy Judge Peter Walsh in Wilmington approved London Fog's reorganization plan last week.

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