Yesterday (20 September 2007), Bombay Canada's Dallas, Texas-based U.S. parent company filed voluntary petitions for re-organization under Chapter 11 of the U.S. Bankruptcy Code for itself and its U.S. subsidiaries in the U.S. Bankruptcy Court for the Northern District of Texas.

In a statement, the company said sought protection on both sides of the border after determining that restructuring is in the best long-term interests of its employees, customers, creditors, business partners and other stakeholders. The re-structuring will help its address its financial challenges while identifying a "strategic or financial investor."

"After considering a wide range of alternatives, this course of action was seen as the best route to help preserve our internationally respected brand while working to secure our future," said David B. Stewart, Bombay's chief executive officer. "With a tremendous talent pool and an excellent selection of high quality home accessories and furnishings, we are confident that our business will emerge from this process stronger and more competitive. We are very grateful for the dedication and hard work of all our employees and look forward to providing them with a clear road map for success."

The company said its plans to keep both its stores and web sites operating. Bombay has 50 retail outlets across Canada, among a total of 419 across North America.

To help fund operations during the restructuring, GE Corporate Lending and GE Canada Finance Holding Company have expressed a willingness to provide a US$115 million debtor-in-possession (DIP) financing facility, of which up to $15 million would be for the benefit of the Canadian operations. The company will be seeking court approval of the DIP facility next Tuesday (25 September 2007), while Bombay Canada will be seek similar approvals from the Ontario Superior Court the following day.

It also said that it will continue to pay employee wages, salaries and benefits during the re-structuring period and will honour its customer service policies - including returns, exchanges, credits and gift cards - and pay ‘post-petition' vendors, suppliers and other business partners for goods and services.