Value City files Chapter 11 bankruptcy, plans to close remaining stores

By Caroline Salls

Pittsburgh, Oct. 27 - Value City Holdings, Inc. filed for Chapter 11 bankruptcy Sunday in the U.S. Bankruptcy Court for the Southern District of New York.

According to court documents, because of the constriction or elimination of existing trade credit and restrictions on availability under its pre-bankruptcy credit agreement, Value City has been unable to replenish inventory in its stores, but it continues to pay operating expenses.

The company said defaults under the credit agreement have left it with no access to capital to purchase new merchandise for its stores.

As a result, Value City has requested court approval to assume pre-bankruptcy agreements with Tiger Capital to help the company conduct going-out-of-business sales at substantially all of its remaining stores.

In connection with the bankruptcy filing, Value City has obtained a commitment for $40 million in debtor-in-possession financing from National City and Wells Fargo Retail Finance, LLC.

Interest on the DIP loans will be Base rate plus 100 basis points.

Proceeds will be used to repay pre-bankruptcy debt and for general corporate purposes.

The facility will mature in 120 days.

The company listed $100 million to $500 million in both assets and debt.

Value City's largest unsecured creditors include DSW Inc., Columbus, Ohio, with a $4.49 million expense claim and NEJ Wholesale Clothing, Beacon Falls, Conn., with a $1.39 million merchandise claim.

Value City is a Columbus, Ohio, off-price retailer. Its Chapter 11 case number is 08-14197.

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