Eddie Bauer files for bankruptcy

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NEW YORK (CNNMoney.com) -- Eddie Bauer Holdings Inc. filed for Chapter 11 bankruptcy protection Wednesday, citing an inability to pay back debt.

Eddie Bauer (EBHI) emerged from Chapter 11 bankruptcy in 2005 after being spun off from former owner Spiegel Catalog, which itself sought bankruptcy protection in 2003.

Costs from the 2005 reorganization, combined with pressure from the current recession, left the company "with no choice but to use this process to reduce the debt load," said chief executive Neil Fiske in a prepared statement.

"Eddie Bauer is a good company with a great brand and a bad balance sheet," he added.

The outdoor clothing retailer plans to sell most of its assets to private-equity firm CCMP Capital Advisors for $202 million. It expects the sale will be complete in 60 days or less.

CCMP has agreed to keep most of the stores and employees, though the sale is open to other bidders per bankruptcy law. Eddie Bauer has 371 stores nationwide, with 8,600 employees.

Eddie Bauer said it secured financing from Bank of America (BAC, Fortune 500) and CIT Group/Business Credit (CIT, Fortune 500) for a total $100 million based on final court order.

In April the company negotiated with lenders for short-term relief on its debts before "explor[ing] various paths for restructuring its balance sheet," the release said, but it was ultimately unable to do so.

Eddie Bauer is only one of several retailers to file for bankruptcy during the recession. Circuit City, KB Toys, Sharper Image, Fortunoff, Filene's Basement, Steve & Barry's and Linens 'n Things have all filed for Chapter 11, crunched by low consumer spending power.