Berean Christian Stores Files Chapter 11, Seeks Buyer

By Jim Milliot -- Publishers Weekly, 6/12/2009 7:10:00 AM

Berean Christian Stores has filed for Chapter 11 bankruptcy protection, and, according to its filing, is seeking a buyer for the company. In its court papers, Berean said that Berean Christian Stores Endeavor, a limited liability company, will serve as a “stalking horse” to draw out other interested buyers for the retailer. It was not clear at press time who the owners of Berean Christian Stores Endeavor are or how much they are willing to pay for the company. The investment banking firm Silverstone Capital has been hired to explore Berean’s alternatives, including the sale of the company.

Berean listed assets of between $1 million to $10 million and liabilities of $10 million to $50 million. Among its unsecured creditors, Thomas Nelson was owed the most, $824,107, followed by Zondervan, which is due $786,106. Other companies on the top 10 list include STL Distribution, owed $488,488, Tyndale House, out $334,675, and Standard Publishing, owed $210,235.

In the filing, Berean cited lower than expected sales in 2009, with comp sales down 20%, as a key factor in the decision to file for Chapter 11. The sales slowdown followed an aggressive period of expansion between 2006, when the retailer’s management backed by the equity firm JMH Capital bought the company, and 2008. When business slowed in 2008, the company began using its loan agreement to fund operations and then instituted a number of cost cutting initiatives, including the closure of a number of stores. After examining other options through a special committee, Berean's decided that Chapter 11 was its best course of action. The goal of the filing, the company said, is to restructure the retailer prior to a sale.