Big M sues its insurer over bankruptcy [The Record (Hackensack, N.J.)]

Nov. 12--Big M Inc. of Totowa, the former operator of the Mandee, Annie Sez and Afaze clothing stores, is suing Westport Insurance Co. of Kansas, saying the insurer pushed Big M into bankruptcy by failing to promptly reimburse it for losses incurred during Superstorm Sandy.

In a complaint filed in U.S. Bankruptcy Court in New Jersey this week, Big M Inc., the debtor-in-possession in a bankruptcy case begun in January, states that Westport's failure to reimburse the company fully and promptly caused damages in excess of $10 million.

When Big M filed for Chapter 11 bankruptcy protection in January, executives said Sandy had derailed efforts to turn around the struggling retailer of women's apparel. Most of the company's stores were located in the Northeast, and Sandy-related closings cost many of the stores a week of sales. Three of the company's stores were closed for a month. The company said a delay in receiving insurance reimbursements left it unable to pay its vendors, landlords and other creditors.

In May, Big M sold its stores and assets to a Canadian clothing retailer, YM Inc., for $22 million. YM is continuing to operate the stores under their existing brand names.

YM is not involved in the lawsuit. Big M is pursuing the complaint as a way to raise money to pay creditors.

"As a direct and proximate result of Westport's bad faith and breach of the covenant of good faith and fair dealing, Debtor [Big M] has suffered substantial damage in excess of $10 million,'' the court documents state. The complaint seeks compensatory and punitive damages, interest and attorney's fees.

Westport Insurance Co., a division of the Swiss Re insurance group, said it does not comment on litigation.

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