Jag files for Chapter 11, cites $8 million liabilities.

Jag files for Chapter 11, cites $8 million liabilities Chic clothing maker Jag Beverly Hills Inc. has been forced into bankruptcy. The company filed for Chapter 11 bankruptcy protection in Los Angeles to counter efforts by creditors in New York to liquidate the company.

Problems for Jag, and owner Paul Guez, have been mounting since last year when Sanwa Bank California began taking legal action to recover $7.6 million in credit extended to Jag and guaranteed by Sasson Jeans Inc., which is also owned by Guez. Sanwa claimed that Jag and Sasson defaulted on their obligations, but Guez insisted the companies did not violate their credit agreement with the bank. Sasson filed for bankruptcy protection last October, staying any claims by San Francisco-based Sanwa on its assets.

Earlier this year, however, Sanwa and two other creditors responded by forcing Jag into an involuntary Chapter 7 bankruptcy.

The company made stylish swimwear, jeans, shirts and skirts. Sasson has been a very popular line of jeans.

In a filing this month, Jag lists assets of approximately $15 million and liabilities of $8 million, with Sanwa's disputed claim accounting for the bulk of Jag's debts. Nineteen other creditors include local companies such as Pacific Bell, West Coast Button and Acme Thread and Supply.

Guez's Los Angeles attorney, Barry Edwards, says the Chapter 11 filing should automatically supplant the unfriendly Chapter 7 filed in New York, but the issue of where to litigate the bankruptcy case is still up in the air. Sasson's Los Angeles Chapter 11 filing has been transfered to New York, despite strong objections by Guez and his attorneys. In that filing, Sasson listed approximately $11.5 million in assets and $7.5 million in liabilities.

Guez also lost an attempt to avert naming of a trustee in the Sasson case once it was transfered. Creditors won the trustee appointment after Guez failed to file asset and liability schedules and a comprehensive list of creditors.

Guez maintains that he was unable to file timely papers with the court because of his other legal entanglements and because of problems he has had procuring representation. Several law firms have quit their services for Guez and his companies, including the New York firm of Shea & Gould, which resigned after supposedly failing to get paid $150,000 in fees. Another firm representing Guez was slapped with a $100 million suit for alleged malpractice in their representation of Guez.

Other problems that have beset Guez include a $4.5 million suit brought by a New York artist alleging he was assaulted by a Sasson employee while at Guez's New York home. Guez also was involved in complicated disputes with his estranged wife and with his brothers who several years ago moved to take control of Sasson Jeans. Sasson also settled with Vidal Sasoon on a $25 million suit he brought in 1985 for improper name appropriation. In the agreement, Sasson Inc. agreed to alter the pronunciation of its name so that it would not be confused with Vidal Sasoon's company.

Guez says he is angered by the slew of suits he has been dragged through since taking up U.S. residency in 1976. The Tunisian-born clothier claims his opponents "did everything in their power including perjuring themselves in front of judges" to force him into financial ruin. Guez, who once earned $12 million a year, and says he has $30 million in assets, may have his posh New York home confiscated by the courts, and he worries that soon "I will be maybe a beggar in the streets," if his legal problems do not improve soon.

Attorney Edwards predicts, however, that Sanwa's suit against Jag in California will take at least three years before it is settled. In the meantime, says, Guez, he hopes to avert personal bankruptcy.