Harry & David gourmet gifts filed for Chapter 11 bankruptcy protection

Industry supplier and food and gift retailer Harry & David (asi/59710) filed for Chapter 11 bankruptcy protection this morning in the U.S District Court of Delaware. The company said that it already has filed a plan to reorganize its finances and has reached new restructuring agreements with the owners of the majority of its senior notes. The moves allow Harry & David to eliminate much of its debt and continue its operations moving forward without interruption. 

In its filing, Harry & David announced it had reached an agreement with UBS AG, Staford Branch and other financial institutions to receive a $100 million credit line, which will help to run its business and fund the company through its bankruptcy proceeding. The company’s bankruptcy filing follows a difficult holiday season for Harry & David. The retailer and catalog company reported that its net income for the second quarter, which concluded on December 25, had dropped by 57% compared to the same time period last year.
 
Also, in February, Harry & David's parent company, New York-based investment firm Wasserstein & Co., said it was temporarily replacing CEO Steven J. Heyer, who had been on the job a year, with restructuring specialist Kay Hong. "We believe that entering into this agreement provides the best opportunity for Harry & David to restructure its balance sheet on an expedited basis, strengthen its operations and create long-term value, while continuing to provide customers with the highest quality products and service," said Hong, chief restructuring officer and interim CEO, about the bankruptcy filing and subsequent financing agreements.