(Reuters) - Bakers Footwear Group Inc, which operates 215 women's shoe stores in the United States, filed for bankruptcy protection on Wednesday as it struggles to restructure its business amid falling sales.
Sales at St. Louis-based Bakers' mall-based stores have fallen 5.9 percent compared to last year, squeezing the company's cash and causing it to default on a loan, according to court documents.
The chain, which sells to young women, has been closing and selling stores, laying off staff and ending licensing deals as it tries to turn its first annual profit since the year that ended in January 2006, according to the company's annual reports.
Bakers' weak sales this year pushed it into default on a $30 million secured credit facility it entered into in June with Crystal Financial LLC.
Crystal agreed to lend the company $22 million to get it through its bankruptcy, according to documents filed in St. Louis's bankruptcy court. The loan requires that Bakers have a bankruptcy restructuring agreement in place by November 2, or begin a process to find a buyer for the chain.
Founded in St. Louis in 1926 as Weiss-Kraemer Inc. The company was acquired by its chief executive officer, Peter Edison, in 1997, who then bought parts of the Bakers and Wild Pair retail chains out of bankruptcy two years later. The company soon changed its name to Bakers and went public in 2004.
Bakers has assets worth $41.9 million and debts worth $59.5 million, according to court documents.
The company said in a statement it expects the bankruptcy to render its shares worthless. Investors holding more than 5 percent of the company's stock include the CEO Edison, Steven Madden Ltd
The company's pink sheet stock was down 81 percent in afternoon trade at 9 cents.
The case is: Bakers Footwear Group Inc, U.S. Bankruptcy Court for the Eastern District of Missouri, no. 12-49658.
(Reporting by Tom Hals in Wilmington, Del.; Editing by Leslie Gevirtz)