NRDC Equity Partners, the owner of the Lord & Taylor department store chain, plans to acquire Fortunoff, the Westbury, N.Y.-based jewelry and home furnishings company, according to a statement.
To effect the transaction, Fortunoff has filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code.
“This transaction will help realign our capital structure and provide an avenue for future growth,” said Arnold Orlick, Fortunoff’s chief executive.
Richard Baker, chairman of Lord & Taylor and chief executive officer of NRDC Equity Partners, added, “We plan on investing $100 million into the Fortunoff business.” He told reporters Fortunoff could be a national chain.
In conjunction with the bankruptcy filing, Lord & Taylor has made available a $10 million letter of credit to enable Fortunoff to continue to purchase inventory. In addition, certain of the company’s existing lenders have agreed to provide Fortunoff with debtor-in-possession financing that will be used to run its business during the bankruptcy process pending the sale.
The bankruptcy process will permit other interested bidders to make competing offers. Subject to the approval of the Bankruptcy Court and other customary conditions, the sale is expected to close in early March.
All of Fortunoff’s stores and its corporate headquarters will remain open during the Chapter 11 process, the company stressed.
The announcement of the purchase and Chapter 11 filing came days after Fortunoff revealed it was having financial problems, caused mostly by the bad economy and increasing expenses.