DECATUR - A deal could be struck next month to allow K's Merchandise to stay in business and avoid bankruptcy.
"There is optimism here," said Frank Morton, a managing director of Boston-based Gordon Brothers Group.
Gordon Brothers Group acquired effective control of K's earlier this year and provided new financing after K's previous lender declared the company in default.
An out-of-court settlement between K's and its creditors appears on the horizon, according to a Friday news release from Gordon Brothers Group.
Rumors have swirled in recent months about the future of the Decatur-based chain, a 50-year-old, family-owned business with 17 stores in Illinois, Indiana, Iowa, Kentucky and Missouri.
"We're very optimistic in repositioning the business and restoring it back to what the K's customer is used to, and even improving upon that," Morton said.
A committee of major creditors was formed last month to negotiate repayment. An agreement recently was reached between that committee and Gordon Brothers.
"We believe it's a good deal," said Jay Indyke, a partner with a New York law firm that represents the committee of major unsecured creditors.
The next step is for about 2,000 creditors to vote on the committee's recommendation, Indyke said. The committee hopes and expects creditors will approve the deal before the end of June, Indyke said.
A "good portion" of creditors would have to approve the agreement, Indyke said.
Gordon Brothers Group will work closely with K's senior managers to reinvigorate the retail chain's profitability. Gordon Brothers has helped other troubled retailers emerge from tough times.
"It's one of our strengths," Morton said.
K's corporate offices are located in Decatur and there are no plans to change that, Morton said.
"We're working with the existing K's management team to put into place new merchandising and advertising strategies to enhance the business," Morton said.
Plans are under way to improve K's merchandising section, revamp the furniture department and "aggressively expand" its jewelry section, according to a news release from Gordon Brothers Group.
"Helping retailers like K's find value in their business is what we do best," Morton said.