Walking Co. files bankruptcy to close 90 underperforming stores

By Caroline Salls

Pittsburgh, Dec. 8 - Walking Co. Holdings, Inc. filed for Chapter 11 bankruptcy Monday in the U.S. Bankruptcy Court for the Central District of California to "shed unprofitable stores and emerge from Chapter 11 in early 2010," according to a company news release.

The company said it implemented a major restructuring in early 2009 in order to try to survive the difficult retail environment.

The restructuring was successful on most fronts, the company said, but Walking was largely unsuccessful in getting its landlords to adjust the occupancy costs under its leases.

Walking said it plans to file its plan of reorganization within the next few weeks.

"This action is an unfortunate but necessary and responsible step to preserve the Walking Company's value for its secured creditors, vendors, landlords, additional creditors and employees in light of the ongoing challenging retail environment," chief executive officer Andrew Feshbach said in the release.

"We believe our business model is sustainable in today's world, despite declining consumer spending and mall traffic at present.

"However, the unfortunate timing of our rapid expansion caused us to enter into lease commitments at what now appears to be the high water mark for retail space."

The company has requested court approval to hold closing sales at 90 underperforming stores and reject the related leases.

DIP financing

In connection with the bankruptcy filing, Walking has obtained a commitment for $30 million in debtor-in-possession financing from Wells Fargo Retail Finance, LLC.

The facility includes a $2 million sublimit for letters of credit.

The DIP loan will mature on the earlier of April 15, 2010 and the effective date of the company's plan of reorganization.

Interest will be Libor plus 350 basis points.

Debt details

According to court documents, Walking had $110.1 million in assets and $84.5 million in debt at Sept. 30.

The company's largest unsecured creditors include:

• Deckers Outdoor Corp. of Goleta, Calif., with a $2.35 million trade claim;

• Ken Atchison of Estero, Fla., with a $1.72 million noteholder claim;

• Simon Property Group of New York, with a $1.54 million landlord claim; and

• General Growth Properties, Inc. of Chicago, with a $1.22 million landlord claim.

The company's financial adviser is Clear Thinking Group LLC.

Walking Co. is a Santa Barbara, Calif.-based comfort footwear retailer. Its Chapter 11 case number is 09-15138.

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