THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, December 16, 1994 TAG: 9412160580
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
LENGTH: Short : 50 lines
A federal judge in North Carolina has approved Rose's Stores Inc.'s reorganization plan, which calls for the discount retailer to emerge from bankruptcy in the spring, the company said Thursday.
Judge A. Thomas Small approved the plan late Wednesday afternoon in U.S. Bankruptcy Court in Raleigh.
``Our plan confirmation represents a major milestone in Rose's Chapter 11 process and paves the way for our successful reorganization,'' R. Edward Anderson, Rose's president and chief executive, said in a statement.
Under the reorganization, the 113-store chain based in Henderson, N.C., must earn $25 million before income tax, depreciation and amortization for the 11 months ending Dec. 31.
The company will announce whether it has met that goal on Jan. 20.
Rose's has nine stores in Hampton Roads. It has closed about 100 stores nationally since filing for protection from creditors in the fall of 1993.
Rose's has to earn $8 million to meet its goal by year's end. But company executives say they're confident that holiday sales will make up the difference.
The plan also will transfer almost 100 percent of the company's stock to unsecured creditors, mainly merchandise vendors, in payment of $120 million they are owed.
Secured creditors will get payments reducing their debt from $108 million at the time of last year's filing to an amount lessthan $27 million.
If everything works out, Rose's will emerge from bankruptcy by April 30.
Rose's went bankrupt in the fall of 1993 after big discount chains, namely Wal-Mart, moved into its regional, small-town markets.
``There was a financial spiral that happened in the summer of 1993,'' said Bob Gorham, a company spokesman. ``Other discounters were moving into small towns, which cut into Rose's customer base. Any time you have additional competition, it cuts into the market share that other retailers have.''
Although the Hampton Roads' market is becoming a hot spot for new discount retailers such as Target, Hills and Super Kmart - Rose's has its own formula for success, Gorham said.
``One thing about Rose's: We're really being attuned to the customers in our stores, making sure they are taken care of and differentiating merchandise from our competitors to give us an edge.'' MEMO: The Associated Press contributed to this report. by CNB