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Tue March 29, 2011
Retailer Harry & David file "pre-arranged" bankruptcy but stays open
Gourmet food company Harry & David hopes to make a quick trip through bankruptcy reorganization. The legendary Northwest retailer filed a “pre-arranged restructuring” plan with a Delaware court.
The struggling retailer will use the bankruptcy process to shed its heavy debt load and repair its balance sheet. The century-old Medford, Oregon icon filed papers saying the majority of its bond holders have agreed to swap their debt for equity in a restructured company.
Those same lenders will provide interim financing to Harry & David so it can keep paying salaries and vendors during the bankruptcy. Lake Oswego, Oregon bankruptcy attorney Matt Goldberg says these are good signs for the region.
“Compared to the things that can happen in a bankruptcy, like breaking up the company, selling it off in pieces, I mean there certainly could have been worse news than this,” says Goldberg.
Harry & David is one of the largest employers in southern Oregon. The gift basket seller says its stores and website will stay open without interruption. It will also keep honoring gift cards and food club subscriptions.
“It appears as if they’re going to keep the company largely intact, which I think is very good news for southern Oregon. What’s unclear to me is whether and to what extent it will try to streamline its operations,” Goldberg explains.
Harry & David has already experienced several rounds of layoffs and store closings. A company spokeswoman says this restructuring should have no impact on customers. She expects the remaining stores to stay open without interruption.