Loehmann’s Decides to Honor Credits

During Loehmann’s second bankruptcy-court appearance Wednesday, the company announced that it would continue be honor store credits from returned merchandise throughout its liquidation sales.

The decision is a reversal from its first bankruptcy court appearance on Wednesday, when Loehmann’s said it wouldn’t accept store credit but would honor gift cards during its store-closing sales.

Loehmann’s is selling the right to hold going-out-of-business sales at its 39 locations during an auction in early January, with sales to start around Jan. 13.

As part of the contract it has with the liquidator, which will be tested at auction, Loehmann’s will receive roughly 75% of the amount generated during the sales. The liquidators receive the other 25%. However, Loehmann’s must reimburse the full cost to liquidators of whatever gift cards or store credits are honored during the sales. On Wednesday afternoon, it announced its intention to do so.

Loehmann’s filed for Chapter 11 bankruptcy on Monday.

Write to Stephanie Gleason at [email protected]. Follow her on Twitter at @stephgleason.