Mervyn’s Files Chapter 11 Bankruptcy

Mervyn’s, which is headquartered in Hayward, CA, has filed for Chapter 11 Bankruptcy. Under Chapter 11, the debtor (Mervyn’s) can continue to operate while it works out a plan to pay its debts and sort through its financing. It’s supposedly working on a finance package being arranged through Wachovia which would allow it to fight for its survival.

Mervyn’s has indicated that intends on closing about a dozen stores, but hasn’t identified those yet. This has been a tough year for mall owners as a number of retailers (Sharper Image, Linens & Things, Steve & Barry, etc.) have been victims of the weak economy.

Unless things turn around for Mervyn’s, it seems as though filing Chapter 11 is just a stop on the way to Chapter 7.

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