Clothestime May Soon Exit Bankruptcy

SANTA ANA — Attorneys for Clothestime said Monday that they are working on a deal to take the company out of bankruptcy.

Terms of the deal weren’t revealed, but attorney Paul E. Harner said the Anaheim-based chain of junior women’s apparel stores could announce a “favorable conclusion” to its year-old Chapter 11 bankruptcy reorganization during February.

“The prospects remain quite bright,” Harner said. “There have been a number of positive developments.”

Creditors of Clothestime, which entered bankruptcy in December 1995, also expressed confidence that the chain is working toward a plan of reorganization.

“We have no reason to believe this will be a long-term project,” said Jeffrey N. Pomerantz, an attorney representing the creditors committee.

Word of the possible reorganization plan, which apparently would involve an investment in the troubled company, came during a brief status conference Monday before U.S. Bankruptcy Judge John J. Wilson in Santa Ana.

Harner said that creditors and the company have “the utmost confidence” in David A. Sejpal, the longtime Clothestime executive who was named chairman, chief executive officer, president and chief operating officer Jan. 17 after John Ortega II and Norman Abramson unexpectedly resigned. Ortega was chairman and chief executive, and Abramson was president and chief operating officer.

Attorneys declined to say Monday whether former Clothestime executive Michael DeAngelo is still interested in making a bid for the chain, which he co-founded during the 1970s. DeAngelo indicated late last year that he might make a bid for the company.

Clothestime, which operates about 400 stores, was forced into bankruptcy when it lost market share to bigger companies that were better able to predict fashion trends among young women.

The company started as a swap meet booth during the 1970s and grew to include more than 550 stores before falling upon hard financial times.