Some of our Escondido readers may be familiar with the clothing retailer Frederick's of Hollywood, a company with a famous flagship store in Hollywood. The company specializes in lingerie, and for years was a popular spot in shopping malls across the country. Unfortunately, because of the constantly decreasing amount of shoppers at malls - and, as a result, less revenue - the company recently filed for Chapter 11 bankruptcy protection.
However, unlike some companies that find themselves in this oftentimes precarious financial situation, Frederick's of Hollywood appears to have a solid plan in the works. According to recent reports, the company went into the bankruptcy process with a $22.5 million bid in hand from another company that wants to keep them running as an online-only presence.
Still, the bid to keep the company in business as an online-only option may not be the end result of filing for Chapter 11 bankruptcy. Frederick's of Hollywood has reportedly targeted May 28 as an auction date, and if there are any better offers at that time the current plans may not work out.
This is actually the second time that Frederick's of Hollywood has been in need of debt relief and filed for Chapter 11 bankruptcy. The reports indicate that the company also went through Chapter 11 bankruptcy back in 2000 in California. Two years later, the company became largely the property of lenders. Only time will tell if the present plan to switch to an online-only retailer will be the change that is needed to keep the company afloat this time around, but with an ever increasing trend of consumers doing their shopping primarily online, this may be the most appropriate move for the retailer to make.
Source: The Wall Street Journal, "Frederick's of Hollywood Files for Bankruptcy Protection," Peg Brickley, April 20, 2015