Converse Files for Chapter 11
B O S T O N, Jan. 23 -- Sneaker maker Converse Inc. is closing three NorthAmerican production plants, which employ about 1,000 people, andplans to shift production to Asia as part of a bankruptcyreorganization.
The 93-year-old North Reading-based company, best known for itsbasketball and "Chuck Taylor" brand shoes, filed for Chapter 11bankruptcy and said Monday it plans to close its plants inLumberton, N.C.; Mission, Texas, and Reynosa, Mexico, by March 31.
The company said a distribution facility in Charlotte, N.C.,also could be affected by the company's previously announcedrestructuring plan, depending on how Converse's new licensingarrangements develop.
New Plan: Licensing Converse
"One could perhaps criticize us for holding on longer thanmost," chairman and CEO Glenn Rupp said in a telephone interview."If you look at our major competitors, with rare exceptions, allof their products are manufactured in the Far East."
The company said it plans to become exclusively a licensor ofConverse-brand products — a model it has already adopted foroverseas sales.
Converse said it has enough financing to continue operationsduring the restructuring. The company has filed a motion with thebankruptcy court seeking approval of an agreement to make GlobalBrand Marketing Inc. the licensee for Converse-brand footwear inthe U.S.
The company, which was facing a Jan. 31 deadline to satisfy itscreditors, missed a $25 million interest payment in June and hadmore than $183 million in debt in July.
Some creditors were asking for full payment of principal andinterest.
Strong Sales, Stronger Debt
Rupp insisted the Converse brand and sales are strong, but thecompany is simply too overwhelmed by debt dating back to its 1995acquisition of ApexOne and subsequent litigation. It also sufferedthrough a dramatic slump in the athletic footwear market worldwidein 1998 and 1999.
"We certainly didn't have the wind at our back," Rupp said.
