Disgruntled investors, including hedge fund Aurelius Capital Management, have ignited a fresh legal battle over Nine West Holdings Inc. — a year after the retailer exited bankruptcy with different owners, a new name and less debt, Bloomberg News reported. The lawsuit is the creditors’ second case involving the footwear chain after their investments suffered losses of more than 80 percent. They sued Sycamore Partners last year, a case that was settled after Sycamore paid them $120 million to drop claims that its 2014 buyout rendered Nine West insolvent while enriching shareholders by over $1 billion. The new lawsuit target: executives at Nine West and its then-parent, Jones Group Inc., who worked with Sycamore to complete the buyout and shared in the windfall. They aren’t covered by the settlement over previous claims. “These directors and officers closed their eyes to the fact that the 2014 transaction would leave NWHI insolvent, inadequately capitalized, and unable to pay its debts,” said the complaint, filed Feb. 13 in U.S. District Court in Los Angeles. Sycamore’s takeover “enriched everyone involved except the company and its creditors.” The suit was brought by the trustee for a group of unsecured Nine West creditors and demands the payments the defendants collected, plus interest. The creditor group held junior debt at Nine West at the time of its bankruptcy and recovered as little as 12 cents on the dollar. Meanwhile, Sycamore earned a 250 percent return on its equity investment of $108 million and more than doubled its money on the entire 2014 transaction, according to calculations included in the lawsuit.
