x Abu Dhabi, UAEFriday 28 July 2017

Istithmar's US store Loehmann's files for bankruptcy

Loehmann's, a US discount retailer owned by an investment vehicle for Dubai World, has filed for Chapter 11 bankruptcy.

Pedestrians walk past Loehmanns department store in the Chelsea neighborhood of New York.
Pedestrians walk past Loehmanns department store in the Chelsea neighborhood of New York.

Istithmar World is helping to coordinate a restructuring of Loehmann's, a US discount retailer it owns, after the store filed for bankruptcy.

Loehmann's filed for Chapter 11 bankruptcy in New York only around two weeks after Istithmar dispatched a team of advisers to the US to try to save the retailer from creditors.

"There's a repricing of some of the assets in Istithmar's portfolio brought at the peak of the market as they have not performed as well as the company had hoped," said Rachel Ziemba, a senior analyst at Roubini Global Economics.

"Chapter 11 will to ensure restructuring happens in an orderly manner and should avoid a free for all among creditors."

Istithmar, an investment vehicle of Dubai World, was responsible for some of the emirate's glitziest purchases during the peak of the economic boom years.

Some of those investments have since soured during the global recession.

Founded as a one-store operation in 1921 by Frieda Loehmann, the retailer passed through numerous hands in the 1980s and 1990s before going bankrupt as the decade ended.

In 2006 Istithmar snapped up an 88 per cent stake from Arcapita, a Bahraini investment company, for about US$264 million (Dh969.6m).

"We look forward to working constructively through this process and achieving a consensual restructuring," said Andy Watson, acting chief executive of Istithmar World.

tarnold@thenational.ae