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BORDENTOWN, NJ-While underperforming stores, a bad economy and weak holiday sales mean some store closings and other adjustments for the major retail chains; for the smaller regional chains it’s more often a death knell. The latest to take a dive is locally based giftware retailer Blue Tulip, which last week filed for Chapter 11 in the Bankruptcy Court for the District of Delaware. As part of its filing, Blue Tulip said it would close all 24 of its stores, which are located in the Northeast from Massachusetts to Pennsylvania.

In its filing, Blue Tulip Corp. blamed the economic downturn and the company’s inability to satisfy its debt obligations, the latter listed as totaling $7.3 million. The company also said it would close all two dozen units, which average 4,500 to 5,000 square feet each, by the end of January, and store-by-store going-out-of-business sales were indeed launched this past weekend. Blue Tulip hired Northbrook, IL-based Hilco as a consultant to help facilitate the store closings.

Founded in 2002, Blue Tulip was the brainchild of former Goldman Sachs retail analyst Joseph Ellis, with the financial backing of Lexington, MA-based Highland Capital Partners. The latter’s Tom Stermberg, a former CEO of Staples, sat on Blue Tulip’s board as managing general partner of the Highland Consumer Fund. In the bankruptcy court papers, Highland Capital Partners is listed as holding a 44% stake in Blue Tulip, with Ellis’ stake listed as 13%.

Officials from Highland did not immediately return calls for comment. Both Blue Tulip’s corporate and e-commerce websites have been shut down, and all references to the chain have been deleted from Highland Capital Partners’ website.

Blue Tulip’s demise will presumably put a block of 48,000 square feet of office and warehouse space at its headquarters here on the market. The chain took the space in early 2006 at KOR Cos.’ Central Crossings Business Park in an expansion and relocation from its original headquarters location in Princeton.

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