London Fog Group files Chapter 11, to sell Pacific Trail business

By Caroline Salls

Pittsburgh, March 21 - The London Fog Group filed Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the District of Nevada, and it will sell its Pacific Trail outerwear business, according to a company news release.

London Fog was unable to secure sufficient working capital and other financing to properly fund its operations, the announcement said.

In connection with the bankruptcy filing, Wachovia Bank, NA has agreed to provide London Fog Group with $40 million in debtor-in-possession financing.

London Fog Group said it has entered into an asset purchase agreement with stalking horse bidder Perry Ellis International to acquire the Pacific Trail brands, licenses and other specified assets and assume some performance and other obligations for a total cash purchase price of $14.5 million.

"We have forged three very attractive businesses targeting distinct markets, yet we find ourselves without sufficient capital to fund the full group's expected growth," London Fog Group chief executive officer David Greenstein said in the release.

"Given our desire to move quickly, combined with or duty to best serve the long-term interests of our stakeholders, the divestiture of Pacific Trail was the logical choice to effect a transaction quickly."

According to court documents, London Fog Group has $59.84 million in assets and $93.28 million of debt.

The company's largest unsecured creditors include:

• Arshad Corp. of Faisalabad, Pakistan, with a $3.76 million claim;

• Gun Yong Trading Co. of Seoul, Korea, with a $1.47 million claim; and

• Jintex Asia of Shang Hai, China, with a $1.22 million claim.

London Fog Group is a Seattle-based apparel company. Its Chapter 11 case number is 06-50146.

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