Retail Chain Files Plan For Reorganization

Clothing store chain Jay Jacobs has filed a plan for reorganization in U.S. Bankruptcy Court and hopes to emerge from Chapter 11 before the holiday shopping season.

The plan has the support of all the major stakeholders in the reorganization, including the creditors committee, the company said.

“Over the past year we have redirected the company’s merchandising strategy and focused on the bottom line, and we are optimistic about the company’s future prospects once we emerge from Chapter 11,” Rex Steffey, president and chief executive officer, said Thursday.

Jay Jacobs filed for bankruptcy protection in May 1994 after a long string of losses.

Under the reorganization plan, unsecured creditors have two options: a cash payout over two years equaling 60 percent of their allowed claim, or a 45 percent cash payout over two years and notes equaling 42 percent of the allowed claim, for a total payment of 87 percent of the allowed claim by 2001.

Shareholders of common stock would retain their current equity interest in the company.

A bankruptcy judge and a majority of unsecured creditors must approve the plan.