LOS ANGELES, FEB. 11 -- Crushed by the recession and a huge debt load, department store giant Carter Hawley Hale Stores sought bankruptcy protection from its creditors today and quit paying interest on its junk bonds.
The widely anticipated strategy allows Carter Hawley Hale to line up a big pool of new financing and reorganize while it continues operating its Broadway, Emporium and Weinstocks chains under federal bankruptcy law.
The Chapter 11 filing is the latest bad news from the retailing industry, which has been wounded by a slump in consumer spending.
Carter Hawley, the West's biggest retailer with 88 stores in six states, said Chemical Bank of New York had promised to provide it $800 million in desperately needed new financing.
Carter Hawley had a slow Christmas and lost $26 million last year. As part of a cost-cutting program, it eliminated about 1,000 jobs last month.
Its problems began when it fended off a hostile takeover by the Limited retail chain four years ago by piling on debt and spinning off its crown jewels, the Neiman Marcus and Bergdorf Goodman stores. It now is trying to cut its $1.6 billion debt by more than half. In December, it sold its Virginia-based Thalhimers chain to May Department Stores for $317 million. But it failed to complete a hoped-for sale of credit card operations to General Electric Capital Corp.
Carter Hawley stock fell by 25 cents a share to close at $1.62 1/2. Its junk bonds due in 1996 fell to 16 1/2 cents on the dollar, down 3 7/8.