Clothing Retailer Aca Joe Files for Court Protection

Aca Joe, once a bright star in the retailing industry, late Friday sought court protection from creditors under Chapter 11 of the federal bankruptcy code.

“The filing is intended to protect and preserve the company’s ongoing business operations and relations with licensees” as negotiations on a possible bailout continue, the company said.

Company officials weren’t immediately available for comment on the specifics of the filing. However, a lawyer familiar with Aca Joe’s finances said the company’s main creditors are Manufacturers Hanover Trust Co., owed about $6 million, and GATX Leasing and a group of note holders, owed about $9 million.

Harry R. Kraatz, Aca Joe’s president, said in a prepared statement that the company’s principal secured creditors fully supported the bankruptcy filing.

Named for Expatriate

Aca Joe, which has 59 company-owned stores and 40 licensed stores, has reportedly been threatened with eviction from some locations because of non-payment of rent. The retailer of casual clothing has been seeking a bailout from a series of private investors, thus far to no avail.

The latest prospective investor is Cherry Lane Fashion Group Inc. of Melbourne, Australia.

Aca Joe is named after expatriate American Joe Rank, whose small chain of stores in Mexico was deluged by U.S. buyers attracted by his lightweight and colorful garments. In 1983, William A. Meyer and Rank formed a partnership to launch the chain in the United States, and their brightly lighted, compact stores caused an immediate sensation.

But industry analysts say that the chain’s ambitions exceeded its management’s capabilities. Finances were depleted by a huge warehouse that far exceeded the company’s needs, an expensive computer system and hefty salaries and bonuses to top officials. Product shipments were disrupted by the September, 1985, earthquake in Mexico City, and Asian manufacturers were unable to take up the slack.

During the first three quarters of 1987, Aca Joe posted a loss of $5.1 million, compared to a $2.7-million loss during the first three quarters of 1986. The company hasn’t reported results for the full year.