The company today announced that it was filing for chapter 11 of the US bankruptcy code, and underlined the fact that other affiliates, including operations in the European Union, Hong Kong, Malaysia, Singapore and Australia, were not filing for protection of this kind.
The protection that the filing provides should allow the company the time to put in place plans for future growth and to try and secure profitability for the division.
To maintain cash flow during the filing the company has secured a commitment for a debtor-in-possession financing facility which is said to be sufficient for the duration of the chapter 11 process.
Aim is sustainable long-term growth
“We are confident that chapter 11 gives us the opportunity to restructure the company with a business model that will be sustainable for long-term growth,” said Stephen Bestwick, acting president of Crabtree & Evelyn Ltd.
The re-organisation is likely to see the closure of some of its less profitable retail stores, which currently number 126 in some 34 different states, the company said in a court filing.
That same filing also stated that the company has between $10m and $50m of both assets and debts.
Losses up, sales down
Crabtree & Evelyn says it expects to make a loss of approximately $13m on a turnover of $100m during the current fiscal year, which compares to a loss of $8m on a turnover of $107.5m during the last fiscal year.
In the meantime the Connecticut-based division says that the day to day running of the US business will continue in the same manner, using the company’s wholesale, e-commerce and traditional retail channels.
The Crabtree & Evelyn brand was launched in the UK over 30 years ago and is currently owned by Malaysian investment firm Kuala Lumpur Kepong Berhad. It specializes in natural-based skin care and soap products that are now sold worldwide.
Jane & Co. also files for chapter 11
Back in April Jane & Co, a provider of personal care products and accessories, also filed for chapter 11 bankruptcy protection with United States courts in Wilmington, Delaware.
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’.
Like Crabtree & Evelyn, 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.