Loehmann's files for bankruptcy for third time, plans shutdown

Loehmann's survived the Great Depression and weathered the Great Recession, but the Bronx-based discount clothing store chain has filed for bankruptcy for a third time and is moving to shut down its entire retail operation, court papers show.

The company has $50 million to $100 million in assets and $100 million to $500 million in debts, according to its Chapter 11 bankruptcy petition, which it filed Sunday in Manhattan Federal Court.

The last time Loehmann's filed for Chapter 11 bankruptcy, in 2011, the chain was bought by Whippoorwill Associates Inc., a turnaround firm.

But this time, the 92-year-old company is likely done for good. In court papers filed Monday, Loehmann's revealed that it plans to sell out and close.

The chain has signed an agreement allowing a joint venture by three liquidation firms to bid on the company at auction, the filing says.

"The debtors arrived at the decision to shut down their retail operation very reluctantly," the court papers say. "However, a liquidation of the debtors' entire retail operation is the best solution for maximizing stakeholder recovery."

Founded in 1921 by Frieda Loehmann and her son, Charles, in Crown Heights, Brooklyn, Loehmann's operates about 40 stores and competes with chains like Ross and TJ Maxx. Similar chains Daffy's and Filene's Basement have recently gone out of business.

The three liquidation firms will buy Loehmann's for $19 million in cash unless a higher bidder emerges and the chain wants the sale completed by Jan. 7.

The filing says Loehmann's sought a seller willing to keep the business open.

"Unfortunately, that process did not yield any meaningful bids and, ultimately, a special committee of the debtors' board of directors approved the commencement of a wind-down and liquidation process," the court papers say.

The company's largest creditors include Spanx and Juicy Couture.

dbeekman@nydailynews.com