Credit Card Shortfall Forces $3B Spiegel Inc. To File for Bankruptcy

Spiegel Inc. on Monday succumbed to its credit crunch, filing for Chapter 11 bankruptcy court protection in Manhattan.

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The ceo knows he will be busy with the restructuring process. "We remain very committed to providing the customer with the same amount of service and quality. It is business as usual."

In addition to the restructuring, the company has an ongoing Securities and Exchange Commission matter that is still proceeding. As reported, the company entered into a consent decree with the SEC earlier this month, which required the appointment of an independent auditor to review the firm’s financial records going back to the start of 2000. The SEC sued Spiegel in a Chicago federal district court for failure to disclose material information about its ability to continue operating its business.

Kosturos said, "We are fully cooperating with their investigation. It is too early to tell where that is going to go."

Bob Carbonell, director of credit at Bernard Sands, a credit reporting agency, said, "We are waiting for the bankruptcy judge to approve DIP financing before deciding what advice to give clients going forward."

Nineteen of Spiegel’s affiliates also filed for Chapter 11 bankruptcy court protection on Monday. Total assets listed were $1.74 billion and total liabilities at $1.71 billion. Of the firm’s 30 largest unsecured creditors, the top 19 are financial institutions. The largest claim holder is Commerzbank AG in Chicago at $103 million. Dresdner Kleinwort Wasserstein, based here, holds a bank debt claim of $92.5 million. Other banks include: DZ Bank AG, here, $86 million; Bank of America, Chicago, $85.9 million, and Deutsche Bank here, $78.5 million.

The catalog firm said in its 2001 annual report that it worked with 1,900 suppliers, with none supplying more than 5 percent of merchandise purchased.

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