Eddie Bauer (NYSE: EBHI) Files for Chapter 11 Bankruptcy Protection

Eddie Bauer Holdings, Inc. (NASDAQ: EBHI), the famed outdoor clothing retailer, filed for Chapter 11 bankruptcy protection on Wednesday.

The company said that a bidder has promised to keep the company’s 371 retail stores open, honor the company’s gift cards and retain the bulk of its employees.

CCMP Capital Advisors LLC has bid $202 million in cash for its assets, according to Eddie Bauer, but other buyers may also make bids while the company is under court protection.

The main cause of Eddie Bauer’s financial downfall has been the lack of consumer spending due to the recession. Eddie Bauer now joins Circuit City, Linens 'N Things, Mervyns and other retail chains that have filed for bankruptcy court protection as consumer spending fell and the recession continued.

Bankruptcy rumors spread after Eddie Bauer reported a loss for the first quarter of $44.5 million as sales fell 16 percent to $179.8 million.

The company had $476.1 million in assets and $426.7 million in debt at the time of the filing Wednesday with the U.S. Bankruptcy Court of the District of Delaware.

Eddie Bauer considered refinancing of all or some of its debt, and it considered a reorganization, sale or liquidation through Chapter 11 bankruptcy protection, as well as continued operation on a modified business plan. It now hopes to be sold.

The company expects to complete the sale process within 60 days.

Eddie Bauer said it has a commitment from its existing lenders for so called debtor-in-possession financing of $90 million.

Eddie Bauer was founded in 1920 in Seattle. The clothing retailer was bought by General Mills Inc. in 1971 and then by Spiegel Inc. in 1988. After Spiegel filed for Chapter 11 bankruptcy protection in 2003 and most of its assets were sold, the remainder was reorganized in 2005 as Eddie Bauer Holdings Inc.

CCMP specializes in buyouts and growth equity investments. Its other retail investments include Cabela's, Guitar Center, 1-800-flowers.com, Quiznos, Pinnacle Foods and Crosstown Traders.

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