Harvey will continue to operate its business and manage its property as a debtor-in-possession, and expects to promptly file a plan of reorganization. This plan, as finally approved, may adversely affect Harvey's outstanding common stock through the issuance of substantial additional shares or common stock, or otherwise. The Debtor hopes to emerge from Court protection by the spring of 2008.
The company, which operates stores in the New York metropolitan area under such brand names as Bang & Olufsen, said it hopes to emerge from bankruptcy protection by the spring of 2008.
Harvey Electronics said it was driven to file for Chapter 11 after the "distraction and expense related to unsuccessful merger negotiations with Myer-Emco Inc. cost over $1.2 million." The merger talks broke off after financing became more difficult to obtain amid tightening credit markets.
The expense of the failed Myer-Emco transaction, plus the inability to raise new equity capital, triggered a delisting of Harvey 's shares from the Nasdaq Stock Market and caused the company to default on its existing senior secured credit agreement.
Interim Chief Executive Michael E. Recca was named chief restructuring officer.