Dubai's Istithmar World investment unit bought New
York-based Loehmann's for $300 million in 2006. The 89-year-old retailer sells
designer brands at discount prices in 15 states and the District of Columbia.
Loehmann's has been trying to buy more time to pay its debts
by asking lenders to swap bonds coming due next year for ones that mature in
2014. It said Friday it failed to get enough creditors to sign on to its plan.
"We continue to be supportive of Loehmann's and are
actively working with management, bondholders and other stakeholders to find a
mutually agreeable position to save the company," Istithmar's acting CEO
Andy Watson said in a statement.
Loehmann's, like a number of other apparel retailers, has
struggled during the recession as consumers cut back on clothes spending.
The chain said earlier this month it would close up to 15
underperforming outlets — about a quarter of its stores — and sell off their
inventory over the next year.
It had been seeking to get creditors holding at least 97
percent of its 2011 bonds to agree to roll that debt over for another three
years, but said Thursday it had signed up lenders representing only 92.4
percent.
Its owner Istithmar has been bogged down with its own
financial troubles.
The company's parent Dubai World, owned by Dubai's
government, earlier this week managed to secure full creditor support for its
$24.9 billion debt restructuring plan after months of negotiation.
A leveraged buying spree by Istithmar earlier this decade
contributed to Dubai's debt crisis, which rocked global markets when it came to
a head last November.
The International Monetary Fund estimates Dubai and its many
state-linked companies owe as much as $109 billion.
Loehmann's traces its roots to 1921, when Frieda Loehmann
opened the retailer's original store in Brooklyn. It is perhaps best known for
its "Back Room," where bargain shoppers search for designer clothes
on the cheap.
