Tultex Files Chapter 11, Court Approves Interim Financing - Brief Article

Bobbin, Feb, 2000

Tultex Corp., a marketer, manufacturer and distributor of activewear, including the Discus Athletic(R) and Track Gear(R) brands, filed voluntary petitions to reorganize under Chapter 11 of the Federal Bankruptcy Code in early December. As part of the reorganization, Tultex's bank lenders have agreed to provide a new $150-million secured debtor-in-possession credit facility, which will allow the company to continue day-to-day operations. At press time, the U.S. Bankruptcy Court for the Western District of Virginia in Lynchburg had approved the company's request for interim use of the $150 million, which will be led by Bank of America.

As part of the reorganization, the company is closing seven manufacturing facilities in Virginia, North Carolina and Jamaica; closing its distribution center in Martinsville, VA; and conducting going-out-of-business sales at its 25 retail outlets. This immediate downsizing will result in the loss of approximately 2,600 jobs.

Commenting on the reorganization, O. Randolph Rollins, president and CEO, said: "Tultex is not alone in having to transform itself rapidly. Practically every company in the textile and apparel industry is suffering today and is deciding that the only way to survive in the face of foreign competition is to outsource manufacturing needs. ... We have explored every avenue to avoid this filing, but to no avail."

The company has implemented an employee outreach program through the Career Management Group, a Lee Hect Harrison Co., Roanoke, VA, in an effort to offer employees career training and outplacement assistance. According to the company, customers and remaining employees will notice little difference in ongoing operations as a result of the filing. Additionally, the debtor-in-possession financing will permit the company to satisfy customer obligations.