Gifts and paper retailer Swoozie's Inc. sought bankruptcy protection Tuesday, indicating it was unable to repay or refinance its debt.
The Atlanta-based company, which has 43 stores in 15 states and 350 employees, filed Chapter 11 in the U.S. Bankruptcy Court's Northern District of Georgia in Atlanta. It has less than$10 million in assets and between $10 million and $50 million in debt, according to the filing.
Swoozie's blamed the bankruptcy on the current economic downturn as well as 13 poorly performing stores it acquired in the Northeast.
“This action is an unfortunate but necessary and responsible step to preserve value for Swoozie’s Inc.’s secured creditors, vendors, landlords, additional creditors, customers and employees in light of the ongoing challenging retail environment," company chief executive Kelly Plank-Dworkin said in a statement.
Chapter 11 filings allow businesses to remain operational through a court-approved debt reorganization plan. A company spokeswoman said it is unclear how many stores may close as part of the reorganization, but Swoozie's locations currently are operating normally.
In its filing, Swoozie's said it has between 200 and 999 creditors. Its three largest creditors are Mud Pie Inc., a Stone Mountain gifts vendor owed $865,852; Design Design Inc. of Grand Rapids, Mich., owed $352,268, and FedEx, which has an outstanding $300,290 bill.
The company was founded in 2001 by Plank-Dworkin, who was in merchandising at the former Rich's department store chain, and her late husband, David Dworkin, a former president at Neiman Marcus.
Despite the economic challenges, the company said its core business is sound and sales rose 21 percent in 2009.
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