There will be no good news coming from this company for several months (if at all). Almost all of their profits take place in the 4th qtr. The company will continute to bleed cash and close stores, slash inventory.
If this is all that the stock can do after this news, look out below. No upside left.
One year ago from the day you posted the stock was at 4.06. After a couple months of rangebound activity, it went on a fairly steady rise and hit a high of 10.15 before the downgrade on sales shortfalls knocked it for a loop. The rally really started in early March '03 and lasted through the end of October. My point is that while "Almost all of their profits take place in the 4th qtr." is a valid statement, there's already evidence out there that it doesn't mean the stock won't rise during the other three quarters.
As for your comment that "There will be no good news coming from this company for several months (if at all)", this is not a valid statement. Just as my stating the exact opposite, that there WILL be good news coming, would not be valid. There's simply no way for either of us to know what's going to happen. I'm not saying that you're wrong that the company might not make it, just that you're wrong to say that you already know whether it will or not. If so, you should be short.
Having said that, I'll be the first to admit that buying stock in this company is extremely risky. The credit restructuring deal will buy management some time to try to return to profitability. Either Waller & co. can turn things around, or it'll go tits up. In the first case you would stand to make a double or triple long, in the second you lose your ass. If you think they can do it, go long. If not, stay out or go short. Personally, I only invest in cheap, high-risk companies, so this is right up my alley. Here are some more examples of this same strategy: