The tough economy is taking its toll on retail businesses, as Mervyns LLC and the owner of Bennigan's restaurants on Tuesday became the latest casualties to wind up in bankruptcy court.
But bankrupt doesn't always mean "out of business." Here are these three businesses' plans.
Mervyns tries to regroup
Hayward, Calif.-based Mervyns, along with certain of its affiliates, filed for protection from its creditors in U.S. Bankruptcy Court for the District of Delaware. It said that all of its stores will remain open and business will continue as the company reorganizes.
Mervyn's has three stores in Tucson. The privately held retailer, which had been languishing for years, operates about 175 locations in seven states but primarily in California.
"Mervyns needs to reorganize its finances and operations due to the state of the economy and difficult operating environment for our industry," CEO John Goodman said in a statement.
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Mervyns said it has received a commitment for a $465 million debtor-in-possession loan from a group led by Wachovia Capital Finance Corp., to fund the company's ongoing operations.
Belly-up for Bennigan's
Restaurant chains Bennigan's and Steak & Ale filed for Chapter 7 bankruptcy protection, and stores owned by its parent company will shut their doors.
Bennigan's and Steak & Ale, owned by privately held Metromedia Restaurant Group of Plano, Texas, filed for bankruptcy protection on Tuesday in the Eastern District of Texas, less than two months after Metromedia said it was not preparing to do so.
In a Chapter 7 bankruptcy filing, a company seeks to liquidate its assets and shut down.
The only Bennigan's Grill & Tavern in Tucson — and the only one in Arizona — closed July 7.
The restaurant, housed at the Riverpark Inn, 350 S. Freeway Road, is being converted into additional banquet space, and a new hotel restaurant opened the day after Bennigan's closed.