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Harry & David Holdings Inc., known for selling its fruit baskets by mail, filed for Chapter 11 bankruptcy protection Monday in U.S. Bankruptcy Court in Wilmington, Del.

According to the Associated Press, Harry & David's bankruptcy agreement calls for converting $198 million of senior debt into equity and the filing would give bondholders control of the company. The mail-order division and 70 retail stores will maintain normal operations during the reorganization.

The company, owned by investment funds controlled by Wasserstein & Co., listed assets and debt of as much as $500 million each.

Harry & David in September reported a net loss of $39.2 million for the fiscal year that ended in June as sales fell 13 percent to $426.8 million, reported Bloomberg News.

The company said it ran into trouble because of lower-cost competition on the Internet and lower sales during the holiday season -- source of 60 percent of its annual revenue, reported Bloomberg News.

After their father’s death in 1914, Harry and David Rosenberg took over the family pear orchards. Back in 1938, the company introduced its Fruit-of-the-Month Club.