Brand Name Companies Go Bankrupt

According to a July 13, 2009 CNNMoney.com article, Brand Name Companies Go Bankrupt, what these bankrupt companies have in common is insufficient consumer demand for their products. Indeed, insufficient demand for newly produced goods and services is the prime characteristic of recessions and depressions. This is why most economists recommend the government step in and buy new products to fight economic downturns. If private consumers are unwilling or unable to purchase newly produced goods and services, the government can increase its purchases to offset the overall decline. Unfortunately, recent increases in federal government spending have been offset by substantial reduction in spending by state governments, so the total effect on overall spending (aggregate demand) has not been as significant as hoped for (and perhaps promised).

As consumers cut back, businesses are scrambling. 14 brands you know -- from an NHL hockey team to Obama's suit maker -- that are hitting the skids.

Battling for a desert hockey team

Maybe this is the comeuppance for planting a hockey team in the desert. In May, the Phoenix Coyotes filed for Chapter 11 bankruptcy protection with up to $500 million in debts and less than $100 million in assets.

After that, a hockey-worthy fight broke out between the two potential new owners: Jim Balsillie, co-CEO of BlackBerry-maker Research in Motion, and Jerry Reinsdorf, owner of the Chicago White Sox and Chicago Bulls. While Reinsdorf said he would keep the club in its adopted home, Balsillie wanted to move it back to Canada. (The Coyotes started as the Winnipeg Jets before moving to Glendale, Ariz., a suburb of Phoenix, in 1996.)

In mid-June, however, the bankruptcy judge ruled against Balsillie's $213 million bid and said the team would be auctioned off in August to anyone willing to keep the club in Arizona. But the bickering between the two sides continues.

Whoever wins, they're scoring a team that averaged fewer than 11,000 fans at each game during the 2008-2009 seasons. That left the stadium almost half empty at home games.

The president's suit maker needs a bailout

Not even having ultra-dapper President Obama as a customer could help Hartmarx. The Chicago-based clothing maker declared bankruptcy in January, just after the president wore its suits for his inauguration and election night attire.

The company listed between $100 million and $500 million in assets and liabilities, and noted in its filing a "substantial decline in discretionary apparel purchases by consumers and by the company's retail customers."

Established in 1872, Hartmarx makes business, casual and golf clothes for its own brands -- including Hart Schaffner Marx, Palm Beach and Racquet Club -- and has exclusive rights to market under other luxury brands -- including Tommy Hilfiger, Burberry men's tailored clothing, Ted Baker, Pierre Cardin and Perry Ellis.

Currently, the brands look to survive under the guidance of British equity firm Emerisque, which bid $128.4 million for Hartmarx.

Six Flags waves the white flag

The economy has been quite the thrill ride for Six Flags. The New York City-based amusement-park operator went belly-up in June, unable to spin off $2.4 billion in debt -- even on the Tilt-A-Whirl.

But never fear: The chain's 20 parks, which stretch from Montreal to Mexico City, will remain open. The Chapter 11 filing is "strictly a financial restructuring" of the company's debt, said President and CEO Mark Shapiro in a statement.

The parks attracted 25 million visitors in 2008, and the company made $275 million. "Six Flags has been a favorite family destination for almost a half century. Our financial reorganization will best position our parks to entertain millions of guests for another 50 years," Shapiro added.

Fancy soap-maker can't hold water

When you're afraid you might lose your job, triple-milled soap, $18 body lotion and aromatherapy spa treatments tend to become less of a priority. The domestic portion of Crabtree & Evelyn filed for Chapter 11 bankruptcy protection in July with between $10 million and $50 million in assets -- and just as much in debts.

The Woodstock, Conn., company was founded in 1973 and built its brand on natural products that feature herbs, fruits and fresh flowers. But as consumers watched Wall Street spiral lower, they reigned in spending on consumer luxuries. Crabtree & Evelyn's 126 stores, mostly sprinkled in malls throughout the country, have seen a sharp sales pullback.

The real-estate portfolio of the company will go under the microscope as part of its bankruptcy filing, but for now, the stores remain open. Crabtree & Evelyn also operates a Web site, which is unaffected by the filing, and distributes products to thousands of wholesalers.

Crabtree & Evelyn is owned by Kuala Lumpur Kepong Berhad, a Malaysian company that is publicly traded there and invests in a grab-bag of industries, including manufacturing, real estate and retail.

Filene's Basement dresses down

This bargain basement may have passed on a few too many deals to its customers. Filene's Basement filed for Chapter 11 bankruptcy protection in May with assets of up to $100 million and liabilities of as much as five times that amount.

The company said the credit crunch coupled with consumers pulling back made its debt burden unmanageable.

Fellow discount retailer Syms agreed to pay $65 million for the company, which was actually founded in a Boston basement in 1909. Syms bought 23 of the retailer's 25 store leases as well as its inventory -- which includes everything from Seven jeans to Prada merchandise. The stores will continue to operate under the Filene's Basement name.

Extended Stay need a refresh

uring a recession, travelers seem to be more willing to bunk up with buddies to save a buck. The long-term hotel operator, Extended Stay, filed for Chapter 11 in June, buckling under a debt load totaling $7.6 billion at the end of 2008, according to court documents.

The hotel chain, meanwhile, showed assets of only $7.1 billion at the end of 2008 with sales of $1 billion for the year. And revenues tumbled further as the recession dug in deeper: The first five months of 2009 saw revenue per available room crater by 23.2% compared to the same period the year prior.

The hotel chain is popular among business travelers who have to work away from home for more than a night, offering apartment-like conditions with fully equipped kitchen, expanded work space, wireless Internet, onsite guest laundry facilities, and pet-friendly rooms.

During the bankruptcy process, the hotel chain -- which has more than 680 properties under a handful of regional names such as Extended Stay America, Homestead Studio Suites, Studio PLUS and Crossland -- will all remain open and in operation.

Eddie Bauer packs up - again

The Washington-based clothing retailer, which is known for its mom jeans and rugged outdoor gear, filed for Chapter 11 bankruptcy protection in June.

This is the company's second spin through the courts. Its previous owner, Speigel Catalog, which bought the company in 1988, had filed for Chapter 11 in 2003. When Spiegel emerged in 2005, Eddie Bauer was spun off and became a stand-alone company for the first time since it was first acquired, by General Mills, in 1971.

"Unfortunately, a crushing debt burden left from the Spiegel bankruptcy combined with the severe, prolonged recession have left us with no choice but to look for ways to restructure the company's balance sheet," said President and CEO Neil Fiske in a statement.

When Eddie Bauer filed for bankruptcy, it claimed between $100 million and $500 million in assets, but just as much in liabilities. Eddie Bauer intends to sell the majority of its assets to CCMP Capital for $202 million, though bidding is still open.

CCMP has agreed to keep the majority of the company's 371 stores open, as well as its catalogue and Web site operations. Gift cards, however, will only be honored until Sept. 1 or the company sells its assets -- whichever comes first.