Two prominent retailers filed for reorganization in bankruptcy yesterday--Brentano's, the century-old book store chain, and The Scandinavian Collection, a group of five furniture stores.
Both companies said they plan to reorganize under provisions of Chapter XI of the federal bankruptcy law and intended to remain in business, though on a smaller scale.
The Scandinavian Collection, based in Springfield, already has closed its Montgomery Mall store but hopes to keep open the other four, said attorney Leslie Lickstein, whose firm, Clary and Pijor, filed the bankruptcy petition yesterday in Alexandria on behalf of World West Corp., the owner of Scandinavian Collection.
Brentano's bankruptcy petition was filed in New York by Brentano's Consolidated Companies Inc., owner of 28 stores across the country, including six in the Washington area.
Local Brentano's officials said the company planned to close its stores in Cross Keys shopping center near Baltimore and Lakeforest Mall in Gaithersburg, but planned to keep open the rest. As many as half the 28 Brentano's stores will be closed, said President Paul L. Ohran.
Both companies said the recession compounded other business difficulties and forced them to seek protection from their creditors in bankruptcy court. Under Chapter XI of the bankruptcy law, a company does not have to pay its debts immediately and is given time by the courts to try to reorganize its business and settle with its creditors.
Attorney Lickstein said The Scandinavian Collection "tried to expand at a time when sales were bad. People aren't buying houses now, so they aren't buying furniture to fill up their houses."
He said several hundred customers who had placed deposits on special orders for furniture "will have their orders filled. Their deposits will be honored."
The furniture chain listed debts of $1.6 million and assets of $963,000, while Brentano's liabilities totaled $13.4 million against assets of $9.7 million.
Its bankruptcy petition said Brentano's has operated at a loss for several years because of "excessive overhead costs and inefficient retailing strategy."
In the Washington area, Brentano's, like other old-line book sellers, has been hurt by the aggressive discounting of Crown Books, the rapidly expanding spin-off of Dart Drug. Most of the Brentano's stores are within a few blocks of a Crown outlet.
Brentano's already is cutting in half its store in Chevy Chase by subleasing the extra space to the Gucci boutique. The arrangement in effect will allow Brentano's to operate rent-free, with Gucci paying enough to cover its total rent, one store official said.
Brentano's downtown store on F Street NW will have to move soon to make way for the renovation of the National Press Building; employes said no lease has been signed for a new location.
Once a subsidiary of the McMillan publishing company, Brentano's was sold in August 1981 to a group including Ohran, other top executives and private investors.
The Scandinavian Collection also is privately owned, with Peter West, the company president, the principal stockholder. The Scandinavian Collection has no business connection to the Scan furniture stores owned by Greenbelt Consumer Services Inc., though it moved into a former Scan location on 31st Street NW when Scan moved into the Georgetown Park shopping center.