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Foundering Eddie Bauer files for Chapter 11; most jobs saved

NEW YORK - Struggling mall retailer Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection yesterday but said a bidder already has agreed to keep the majority of its 371 stores open, honor gift cards, and hold onto most employees.

Eddie Bauer, known for outdoorsy clothing, said CCMP Capital Advisors LLC has bid $202 million in cash for its assets. Other buyers may make bids while the company is under court protection.

Bankruptcy rumors had been swirling as the Bellevue, Wash., firm struggled with slumping sales amid the recession. It reported a loss for the first quarter of $44.5 million as sales fell 16 percent to $179.8 million.

It had $476.1 million in assets and $426.7 million in debt at the time of the filing this week with the U.S. Bankruptcy Court of the District of Delaware.

Since becoming CEO in 2007, Neil Fiske tried to turn the company around, cutting jobs and lowering expenses. But the company continued to falter as the economy soured.

"Now you have too many stores chasing shoppers who are more cash and credit-constrained than any time post-World War II," said retail consultant Burt Flickinger III, managing director of Strategic Resource Group.

It has a commitment from its existing lenders for so-called debtor-in-possession financing of $90 million.

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