We hear so much about the big auto company bankruptcies, we forget other types of businesses are struggling through the economic downturn as well.  And, even though bankruptcy law has been my profession for the past two and a half decades, I was shocked, along with my neighbors and friends, to learn that Eddie Bauer filed bankruptcy just a little more than a week ago.

The actual facts of the ninety-year-old outdoor clothing retailer are hardly unusual these days.  The company reported a first quarter loss of $44 million, and it was $188 million in debt.  According to an article in the New York Times, the falloff in sales happened "just as the chain was trying to pull off a multi-year turnaround that included cost cuts…and changes to the management team."

Eddie Bauer chose to file Chapter 11 Reorganization of Debt, which is a type of bankruptcy used by businesses (and sometimes by consumers with debts over a certain dollar figure).  What that means is, far from going out of business, Eddie Bauer will be sold under the supervision of the bankruptcy court. The proposed buyer is CCMP, a private equity firm that has expertise in company turnarounds.

Speaking to the Chicago Tribune, Eddie Bauer CEO Neil Fiske had this statement to make about the bankruptcy: "We expect the process to be completed very quickly, protecting our employees and vendor partners every step of the way." Fiske referred to his firm as "a good company with a great brand and a bad balance sheet."

While my own bankruptcy law practice centers around individual consumers and small business owners rather than 370-store retail chains, I must say Fiske's words aptly describe most of my clients, who are "good people with bad balance sheets". 

My work is devoted to helping them turn that situation around!