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Bon Worth files for Chapter 11 bankruptcy

Bon Worth, the Hendersonville-based women’s clothing retailer that once operated more than 300 stores across the U.S., has filed for a Chapter 11 bankruptcy in order to reorganize and try to save the company.

 

Built on the polyester fad of the 1970s, the go-to line of clothing for women over 50 faded in popularity as styles and fabric preferences changed. Founded by Hendersonville native Loren Wells and named for his parents, Bonnie and Worth Wells, the company grew from a small outlet in a plain brick house on Four Seasons Boulevard into one of the city’s biggest employers. When a friend doubted that a pair of stretch pants in a hideous brown would ever sell, Wells cracked his trademark grin, explained that the pants cost just 67 cents to make and accurately predicted that snowbirds from Florida would buy them by the thousands. Wells sold the company in 2013 and it has struggled in recent years to sustain the winning formula Wells had created in its early years.
In a bankruptcy petition filed on Aug. 16, the company reported that it had assets valued at $1 million to $10 million and liabilities of $10-50 million. It reported numerous large debts to suppliers, distributors and landlords in shopping malls and outlet centers. Among them were Beginning Industry of Taiwan, $670,287, Carolina Premium Outlets, $45,748; FedEx, $377,348; UPS Freight, $75,088; Fiesta Jewelry Corp., $90,624; Fine Line Imports of Toronto, $65,889; Gettysburg (Pennsylvania) Outlet Center, $53,000; KVS-SKS Industries, San Francisco, $401,178; Lana Fashion Wear, New York, $294,269; Rockvale Outlet Center, Eatontown, New Jersey; $92,869; and four Tanger outlet malls, $253,686.
In a motion seeking the U.S. Bankruptcy Court’s permission to make payroll, attorney Paul R. Baynard of Charlotte said Bon Worth currently employs 200 hourly and 15 salaried employees at headquarters and at stores throughout the country. The company had eliminated employee positions “as a result of the prepetition closure of retail stores” but still needs personnel in sales, customer service and distribution in addition to administration, management and accounting to stay afloat. After last making payroll on Aug. 3, Baynard said in an emergency motion last month that the company owed $112,705 for payroll after Aug. 3, plus insurance premiums, vacation pay and other benefits and reimbursement of employees’ business-related expenses such as travel and meals. Paying employees “is essential to prevent immediate, irreparable harm to the debtor’s business and maintain the good will of the employees and ensure that employees are not saddled with expenses incurred on behalf of” their employer, Baynard said. Judge George R. Hodges authorized the corporation to pay those costs.
Hodges also granted the company’s request to borrow money to continue its business. Without financing, the company “does not have sufficient available sources of working capital, including cash collateral, to operate its businesses … purchase inventory, maintain business relationships with its vendors, suppliers and customers, to pay its employees, and to otherwise fund its operations,” Baynard said in the court filing. “The ability … to obtain sufficient working capital, liquidity and inventory through the proposed post-petition financing arrangements … is vital to the preservation and maintenance” of the company.
Baynard said Tuesday he could not comment on the case. An effort to reach Bon Worth Chief Operating Officer David A. Herman was unsuccessful. Bon Worth’s Board of Directors appointed Herman, then the corporate secretary, chief operating officer on July 17. The board then directed Herman and company CEO Yisan So to file the Chapter 11 bankruptcy petition, according to a court filing.