Lenox files for Chapter 11

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Lenox files for Chapter 11

December 08, 2008

Eden Prairie, Minn.--Tabletop, giftware and collectibles company Lenox Group Inc. has filed a voluntary petition for Chapter 11 bankruptcy protection, with the ultimate goal of selling the business.

According to a media release issued by the company last month, Lenox intends to file a variety of first day motions with the U.S. Bankruptcy Court in the Southern District of New York that, with court approval, will allow it to continue to conduct business as usual without interruption.

In addition, the company will seek approval from the court for a new $85 million debtor-in-possession financing facility provided by its current revolving lender group.

The new facility will provide a continuing source of funds to the company to enable it to satisfy obligations associated with ongoing operations, including the timely payment of employee obligations, material purchases and normal operating expenses.

While in Chapter 11, the company will continue to pursue a sale of its business through a sale process to be approved by the court.

As part of these efforts, Lenox and its lenders have agreed that the company's assets will be sold to a new entity in exchange for cancellation of a portion of the company's secured loans, subject to higher or better offers. This proposal will be considered as one of the offers in the bidding process which is set up to maximize the value of the company's assets for all creditors.

"While fundamentally sound, our business has been significantly impacted by economic conditions and excessive debt levels incurred at the time Department 56 purchased Lenox in 2005," Lenox Chief Executive Officer Marc Pfefferle said in the release. "After exhausting all other possibilities and considering the current state of credit markets and the economy, we determined that the best way to complete a restructuring of the balance 2 sheet and protect our franchise value was to pursue a sale of the company under court approval in a chapter 11 proceeding."

According to Pfefferle, this process will give Lenox the flexibility to operate on a normalized basis, dispose of unproductive assets, reduce operating costs and strengthen its balance sheet.

"We expect to proceed quickly through this process and emerge with a new owner to support and grow the valuable brands that have provided quality tabletop, giftware and collectible products to consumers for more than a century," Pfefferle said.

Lenox Group Inc. provides quality tabletop, collectible and giftware products sold under the Lenox, Dansk, Gorham and Department 56 brand names. The company sells its products through wholesale customers who operate gift, specialty and department store locations in the United States and Canada, company-operated retail stores and direct-to-the-consumer channels including catalogs, direct mail, media, telemarketing and the Internet.

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