Joan Fabrics, Madison Avenue File Chapter 11 Petition

April 10, 2007  by in UnCategorized   

By Home Furnishings Business in on April 2007 Joan Fabrics Corp. and its wholly owned subsidiary, Madison Avenue Design, have filed voluntary petitions in Delaware for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The companies, which filed in Delaware, intend to utilize the Chapter 11 process to reorganize their business and financial operations.

Carl Marks Advisory Group, a business advisory and interim management firm, has taken over day to day operations. Former president and CEO Elkin McCallum stepped down last week, but remains on the board of directors. Joan Fabrics, based in Tyngsboro, Mass., and Madison Avenue will remain fully operational during the Chapter 11 process, according to a company announcement Tuesday. Its 700 employees are unaffected by the filing, and customers should expect business as usual in terms of products, delivery and service.

Richard Heller, chief operating officer, said, “Joan Fabrics has many positive advantages as a business. They ran into some recent challenges due to the downturn in the US textile industry caused by, among other factors, increased foreign competition. However, their quality products, strong customer base and excellent design team provide a solid foundation for the business to be restructured and emerge successfully from Chapter 11.”

The companies have reached debtor in possession financing agreements of more than $10 million with their lenders, led by Bank of America as administrative agent and factor CIT.

Heller said, “This will allow us to meet the companies’ cash needs and give us opportunities to explore strategic options to determine the company’s future. We are already in contact with a number of firms who have expressed interest in acquiring some or all of our operating units. We believe that such a sale will provide the most advantageous result for our employees, customers and creditors.”

Joan Fabrics, founded in 1932, manufactures woven jacquard and velour fabrics. Joan and Madison Avenue have factories in North Carolina and an affiliate in Mexico. Annually, Joan Fabrics introduces over 1,500 new open line designs and provides exclusive designs for the distributor trade and jobbers who supply product to the interior design trade and other related businesses.