Swoozie's, a U.S. retailer of luxury gifts and stationery products, filed for bankruptcy protection on Tuesday, saying it was hurt by underperformance of recently acquired stores in the Northeast.
The company, which voluntarily filed for Chapter 11 in a Georgia court, is seeking to sell its assets to a buyer or liquidator by March 27, according to court documents.
Swoozie's had acquired 13 stores out of the bankruptcy of stationery retailer Blue Tulip, but said the stores had underperformed as they were forced to go dark for a month prior to their reopenings under the Swoozie's brand and fewer customers than expected returned to the new stores.
Sales also dropped in late 2009 as consumers pulled back on paper products, invitations, party goods and home accessories, Swoozie's said in court papers.
As of December 2009, sales for manufacturers of paper and invitations were off target by approximately 28 percent nationwide, and approximately 35 percent in the Northeast, a Swoozie's executive said in court documents.
Swoozie's, which was founded in 2001, operates 43 locations in 15 states and has 350 employees, the company said in a statement on Tuesday.
The company said it has had in-depth discussions with at least nine strategic buyers starting in late 2009, and that it has contacted over 40 possible investors, liquidators, private equity firms and possible industry buyers about a possible deal.
Swoozie's said it believes it is likely its assets will be sold to a bidder that will continue to operate it as a going concern or to a liquidation firm that may seek to shut its stores and purchase its leases.
The company is seeking to schedule a sale hearing on March 26 so that the court may approve a deal. It said in court papers that its inventory is dwindling and the company may not be able to continue operations on its own beyond the end of March.
Private equity firms Northwood Ventures, TWJ Capital and Brand Equity Ventures each own large stakes in the company, according to court documents.
The company said it has retained turnaround specialist Lee Diercks of Clear Thinking Group as a financial adviser, and Alston & Bird LLP as legal counsel.
The case is In re: Swoozie's Inc, U.S. Bankruptcy Court, Northern District of Georgia, No. 10-66316.
(Reporting by Emily Chasan; Editing by Steve Orlofsky)