Gymboree Group Inc. entered bankruptcy as a failed children’s clothing chain. If all goes according to plan, it will leave in the next few months with a new line of business and millions in tax breaks—an amount so large that it could operate tax-free for years, WSJ Pro Bankruptcy reported. The tax breaks also could enable its main creditor and possible future owner, Goldman Sachs Group Inc., to recoup the money it sank into Gymboree. Gymboree is seeking court approval for a plan to buy an art-authentication tech venture that would launch the company in a new direction and possibly unlock the benefit of more than $250 million in federal net operating losses that could be used to wipe out future taxes. The children’s clothing chain, based in San Francisco, filed for chapter 11 bankruptcy early last year, its second filing in less than two years. Going into the most recent bankruptcy, Gymboree owed Goldman $85 million. Even so, Goldman lent the company another $30 million. To get out from under its debts, Gymboree proceeded to sell virtually everything associated with its retail brand. But it still owed Goldman around $25 million. Goldman, which sponsors Gymboree’s chapter 11 plan that would make it the company’s new owner, seems to have two avenues: Gymboree, now renamed Gemstone Solutions Group Inc., still has a handful of employees on the payroll who would continue to try monetizing various financial assets, such as sales tax refunds, still on the books. Those assets include deposits made to customs authorities, which could yield $9 million to $13 million, and to workers’ compensation programs, which could bring in another roughly $2 million, court records show. Some of those efforts, however, could take years.
