Friedman’s to Leave Chapter 11

Under a new reorganization plan, Friedman’s expects to emerge from Chapter 11 bankruptcy protection in November, just before the holiday season.

The 80-year-old chain said that under the plan, all existing equity interests will be canceled when it emerges from Chapter 11. Its 2005–2008 business plan anticipates the company’s return to profitability in fiscal year 2007.

The plan provides that Harbert Distressed Investment Master Fund will get nearly all of the new equity interests in the reorganized Friedman’s. The proposed plan of reorganization was filed Aug. 4 in U.S. Bankruptcy Court for the Southern District of Georgia.

The company still has some challenges to deal with—including lawsuits filed by several state attorneys general alleging that the company once used misleading credit practices, as well as a reported investigation for securities fraud.

Friedman’s has announced plans to close 165 stores, leaving the chain with 481 stores in 20 states.