McCrory Corp., one of the last major retailers clinging to the declining variety store business, told creditors yesterday that it is unable pay $3.4 million in debt due tomorrow. The announcement could foreshadow a Chapter 11 bankruptcy reorganization.
The York, Pa.-based company, in a prepared statement, said it was "considering its restructuring options."
McCrory's announcement comes two months after the chain said it would close 229 of its approximately 1,200 stores. None of the privately held company's Maryland stores were caught in that wave of closings. The company operates about a dozen McCrory's and a half-dozen G. C. Murphy stores in the Baltimore area.
McCrory's joins a growing list of retail companies, led by R. H. Macy Co. and Zales Corp., that have defaulted on debt payments since a sluggish holiday sales season. Both Macy's and Zales have since filed for protection from creditors under Chapter 11 of the federal Bankruptcy Code.
McCrory's announcement affects holders of its 6.5 percent convertible subordinated debentures, which are scheduled to mature tomorrow.
McCrory's said it would not pay either the $3.4 million principal or the interest on the debentures. A debenture is a company's unsecured promise to pay a creditor. In McCrory's case it is convertible to stock.
Besides McCrory's and G. C. Murphy, the corporation also operates under the names J. J. Newberry, H. L. Green and S. H. Kress.
McCrory is owned by Riklis Family Corp., headed by Meshulam Riklis, a native of Turkey who emigrated to the United States from Tel Aviv in 1947.