Completing a successful reorganization in bankcruptcy, a pared-down City Stores Company is beginning to rebuild its business based on its successful W&J Sloane furniture stores.
Sloane's, the biggest retailer of higher priced furniture in the Washington area, has become City Stores' chief retail operation now that several of its other stores have been closed.
City Stores' creditors are eventually to be paid 35 cents cash for every dollar owed them by the diversified retailer, and will get a share of the stock and future profits of the company, which was forced into bankruptcy two years ago this month.
As part of its reorganization, City Stores has sold off its Franklin Simon women's wear stores in Washington and other cities, closed its Lit Brothers department stores in Philadelphia and disposed of several smaller retail operations.
Besides Sloane's, the City Stores group now includes only the Maison Blanche and Lowenstein's department stores in the New Orleans and Memphis markets.
Two W&J Sloane stores in the Washington area were closed during the reorganization, and a third will be shut down temporarily starting next year, said Frank Manarino, executive vice president and general manager for Washington.
The Sloan's store in North Washington Street in Alexandria will be closed in January so a new building can be constructed on that site. When the building is completed, Sloane's will return to Alexandria, Manarino said.
The company earlier pulled out of the problem-plagued Rockville Mall and shut down a business furniture show room in downtown Washington when it abandoned the low-margin office furniture field.
Mararino said confirmation of the creditor's settlement by the federal bankruptcy court in New York "will give us some strength in the marketplace.
"That we were able to consolidate and get out of Chapter XI gives us the ability to deal on a much stronger basis with our suppliers," he added.
The bankruptcy reorganization plan calls for the creditors to get an immediate cash payment of 15 percent of what they are owed, plus another 5 percent in cash every year for four years, starting next January.
The creditors will also share 10 percent of City Stores' profits for the next seven years, and 360,000 shares of City Stores' stock, which is listed on the Philadelphia Exchange.
Last week, City Stores sold part of Sloane's flagship store on Fifth Avenue in New York to a company controlled by foreign investors for $10.5 million. Sloane's plans to reduce the size of its store on that site by about one-third and the new venture plans to build a high-rise office building atop the store.
That sale was the latest of several real estate transactions that enabled City Stores to raise about $10 million. The company sold some property it wasn't using, sold and leased back some other buildings and borrowed $4 million against its equity in other property. None of those deals involved Sloane's Washington operations.