With a potential Chapter 11 filing on the horizon, Gymboree Group Inc. is reportedly looking for a bankruptcy loan. That financing could allow some of the retailer’s stores to remain operating as the company seeks a buyer, The Wall Street Journal reported.
According to unnamed sources cited in the report, it is probable that Gymboree will shutter most of its 900 locations. Yet the company may try and sell over 100 stores per those sources and has reportedly tapped a firm to help it find a buyer. Even so, the sources noted that a bankruptcy filing may not take place as discussions are still ongoing.
The report noted that many retailers have filed for bankruptcy before liquidating, while others have made the filing along with “prepackaged plans” to help them remain operating. (The paper cited Payless ShoeSource Inc. and rue21 Inc. as examples.) But retailers like Sports Authority, RadioShack and Toys R Us wanted to restructure their operations with bankruptcy, yet they ended up having to close amid changes in the behavior of shoppers and brick-and-mortar retail.
The news comes as Gymboree was reportedly considering if it should shutter more than half of its 900-store base, according to reports in November that cited people “familiar with the matter.” The retailer emerged from bankruptcy last year, and had engaged consulting firm Berkeley Research Group to explore its options per reports in November. It was reported that Berkeley was aiding Gymboree in analyzing its leases for its locations in malls.
Among those options for Gymboree, according to the sources at the time, might be to file for bankruptcy again. In the retailer’s prior bankruptcy, the company trimmed its debt to the tune of $1 billion and closed a quarter of its stores, with debt post-emergence tied to a revolving credit line of $200 million and a term loan of $85 million.