The Baltimore-based company, which has an annual turnover of approximately $25m, stated in court documents that cash liquidity issues caused by the economic downturn had affected their business throughout the US.
The filing was made in conjunction with Delaware-based Jane & Company, which is a limited liability corporation collectively known as ‘Jane’.
Limited capital, big debts
In the filing the company stated that it had capital valued at no more than $50,000 and that its debts were somewhere in the region of $1m - $10m.
The procedure means that Jane & Co. has successfully secured a ‘debtor-in-possession financing commitment’ from its secured lender, allowing the business to maintain its operations under the current levels of debt.
This will leave the company the time to try and attract a buyer or buyers for the business or any other alternative exit strategy.
CRO appointed for procedure
The announcement was backed up by the appointment of Drew McManigle as chief restructuring officer (CRO), who is charged with leading the re-organization efforts, while law firm Morris, Nicholas, Arsht & Tunnell will represent the debtors-in-possession.
Under US law Chapter 11 is undertaken when a company is unable to maintain payments to its creditors and represents a re-organization, rather than a more drastic immediate liquidation.
In most cases businesses filing for Chapter 11 have 120 days to seek out alternative plans to re-organize the business before the creditors can legally make their own proposals.
Listed among the business's top 30 unsecured creditors in the filing were Garrett-Hewitt Intenational and Topline Products.