Top Executives Resign From Clothestime

ANAHEIM — Clothestime Inc., in bankruptcy and apparently seeking a buyer for its troubled chain of young women’s apparel stores, said Friday that its two top executives have resigned.

Co-founder John Ortega II, the company’s chairman and chief executive officer, stepped down along with Chief Operating Officer Norman Abramson. Clothestime executives weren’t available for comment, but the company said in a prepared statement that the two men left “to pursue personal interests.”

Chief Financial Officer David A. Sejpal was named chairman, chief executive, president and chief operating officer. Douglas L. Pereira, the company’s corporate controller, and Robert Klausner, director of stores, were appointed to the board of directors.

The unexpected resignations provided more unsettling news for the financially troubled chain that entered bankruptcy proceedings in December 1995. The loss of the two longtime executives also prompted speculation from others in the retail industry about the chain’s fate.

“Without Ortega and Abramson, there doesn’t seem to be much of a company left,” said an executive at another retail chain. “You have to wonder what’s going on over there.”

In December filings with the Securities and Exchange Commission, Clothestime said that its poor financial condition might force management to sell some or all of the company’s holdings. The filing said that Financo Inc., a New York-based investment firm, had been hired to find needed financing and to explore a possible sale.

Clothestime, which traces its roots back to an Orange County swap meet booth during the late 1970s, has been struggling for years to regain its financial health. The chain fell victim to intense competition from national competitors, such as J.C. Penney Co., that were more in tune with the fashion needs of young women.

When it filed for bankruptcy, Clothestime closed 140 of its 550 locations and laid off employees at its distribution center and at its stores. A company spokesman said in December that the company hoped to emerge from bankruptcy during 1997.

But in December, the chain’s executives asked a U.S. Bankruptcy Court judge in Santa Ana to close 22 additional stores. And earlier in the year, Clothestime’s stock was delisted from Nasdaq for failing to meet minimum requirements.

The company’s statement Friday indicated that remaining executives are meeting with a Clothestime creditor committee to explore “available alternatives.”

Ortega, who had served as chairman since 1990, founded the company with August DeAngelo, who departed several years ago. Abramson was named president in 1987.