Home-goods retailer Pier 1 Imports Inc. has found a potential buyer offering more than $20 million for the bankrupt company’s intellectual property and e-commerce business as its brick-and-mortar retail operations wind down, WSJ Pro Bankruptcy reported. The Fort Worth, Texas-based retailer has tapped Retail Ecommerce Ventures LLC to serve as the stalking-horse bidder to acquire Pier 1’s intellectual property, data and other assets related to the e-commerce business. The proposed buyer last year purchased the brand assets of Dressbarn and its e-commerce business from Ascena Retail Group Inc., the parent company of Ann Taylor and Lane Bryant. Pier 1 plans to hold a bankruptcy auction Wednesday after receiving offers from other bidders, according to a securities filing. A hearing to approve the sale to the best bidder is scheduled for July 30 in the U.S. Bankruptcy Court in Richmond, Va.
Iconic clothing franchise Brooks Brothers is nearing a bankruptcy filing that could take place as early as this week, sparking a possible bidding war for the troubled company, FOX Business has learned. Private equity firm Solitaire Partners is in talks with the haberdasher to make a bid once a possible chapter 11 filing has been made. Founded in 1818, the fabled brand is part of the fabric of American retail history — outfitting 41 of the 45 U.S. presidents from James Madison to Barack Obama. Most recently, President Donald Trump wore a Brooks Brothers suit on his Inauguration Day. Despite its storied reputation, Brooks Brothers is in a slump — with company sales hovering around $1 billion since 2017. And analyst estimates suggest sales will be down 30 percent this year as the recession continues. Even the company’s most optimistic efforts don’t show it making a profit until 2022.
Clothing retailer Lucky Brand Dungarees LLC has filed for bankruptcy with initial plans to close at least 13 stores and with a possible deal to sell its private equity-backed business to the operator of Aéropostale and Nautica brands, the Wall Street Journal reported. Debts of the Los Angeles-based business, which is owned by Leonard Green & Partners LP, include $182 million owed to lenders and $79 million to merchandise vendors, according to a filing Friday in U.S. Bankruptcy Court in Wilmington, Del. SPARC Group LLC is leading a proposed deal to buy the business, according to a declaration filed with the court by Mark A. Renzi, Lucky Brand’s restructuring chief. SPARC is an apparel company operating under the Aéropostale and Nautica brands owned by Authentic Brands Group LLC and Simon Property Group, one of Lucky’s key landlords, a court filing said. The offer is subject to better and higher bids and court approval. The bid for Lucky includes $140.1 million in cash and a credit bid of $51.5 million by lenders, a court filing said. It also has a backup bid if that one falls through, a filing said. This isn’t the first time Authentic Brands and Simon have teamed up to take over a troubled retailer. The two firms, along with Brookfield Property Partners, teamed up to buy bankrupt retail chain Forever 21 earlier this year. Authentic Brands and Simon were also part of the group that bought Aéropostale out of bankruptcy about four years ago.
The standard American mall was built around department stores, but the pandemic has been devastating for the retail industry and many of those stores are disappearing at a rapid clip, the New York Times reported. Some chains are unable to pay rent and prominent department store chains including Neiman Marcus, as well as J.C. Penney, have filed for bankruptcy protection. As they close stores, it could cause other tenants to abandon malls at the same time as large specialty chains like Victoria’s Secret are shrinking. Malls were already facing pressure from online shopping, but analysts now say that hundreds are at risk of closing in the next five years. That has the potential to reshape the suburbs, with many communities already debating whether abandoned malls can be turned into local markets or office space, even affordable housing. “More companies have gone bankrupt than any of us have ever expected, and I do believe that will accelerate as we move through 2020, unfortunately,” said Deborah Weinswig, founder of Coresight Research, an advisory and research firm that specializes in retail and technology. “And then those who haven’t gone bankrupt are using this as an opportunity to clean up their real estate.” Weinswig said the malls that are able to withstand the current turmoil will be healthier — better tenants, more inviting and occupied — but she anticipated that about 25 percent of the country’s nearly 1,200 malls were in danger. Most retailers that have filed for bankruptcy are closing stores but plan to continue operating. Department stores account for about 30 percent of the mall square footage in the U.S., with 10 percent of that coming from Sears (which filed for bankruptcy in 2018) and J.C. Penney, according to Green Street Advisors, a real estate research firm. J.C. Penney, which declined to comment, has said store closings will start this summer and could eventually number as many as 250. Green Street forecast in April that more than half of all mall-based department stores would close by the end of 2021.
Luxury Dining Group, owner of the Fig & Olive chain of high-end restaurants with sites in New York, Washington, D.C., and Los Angeles, filed for bankruptcy protection, blaming employee lawsuits and the pandemic, Bloomberg News reported. Majority owner Guillaume Fonkenell will work with company managers to decide which of the nine restaurants are still viable and could eventually turn a profit, according to court papers filed in New York on Friday. The company faces lawsuits related to a Salmonella outbreak that hit its Washington, D.C., and Melrose Place locations. The chapter 11 cases “were precipitated by certain accumulated losses and a series of employment related litigations, with their situation exacerbated by the COVID-19 crisis, forcing each of the restaurants to temporarily close,” the company said in court papers. With time and continued funding from Fonkenell, Fig & Olive can reorganize successfully, Luxury Dining Group said. The company has laid off more than 700 workers and currently has only 34 employees.
More than $6 million of federal loans wasn’t enough to keep HopCat’s beer pubs or TooJay’s sandwich delis out of bankruptcy, Bloomberg News reported. They’re the two biggest recipients of Paycheck Protection Program aid, designed to prevent U.S. small businesses from collapsing during the pandemic, that filed for chapter 11 protection, according to research by bankrutpcydata.com. Almost one out of every 12 companies that have gone bankrupt since early April got PPP loans just weeks earlier, and more are likely on the way. “The bankruptcy trend is just up,” said Jim Hammond, chief executive officer of New Generation Research Inc., which owns bankruptcydata.com. “The money is going to run out.” The recipients that went bankrupt didn’t do anything improper. Federal regulations bar companies from receiving PPP money while they are in bankruptcy — but not the other way around. TooJay’s Management LLC and HopCat parent company Barfly Ventures LLC, which both filed within five weeks of getting federal assistance, are seeking to use the cash to keep operating while they reduce debt and prepare for a fresh start once their court cases end. For them, the low-interest PPP loan is a cheaper way to finance a turnaround than in traditional bankruptcy cases, where lenders routinely charge double-digit interest rates and impose hefty fees. There appears to be no guideline preventing a borrower from heading to the courthouse shortly after getting PPP funds, said Edward Barry, chief executive officer of Capital Bank NA, a Rockville, Maryland-based lender that has made $234 million of PPP loans. “It’s free money if you work within the program,” Barry said.
NPC International Inc., the nation’s largest Pizza Hut and Wendy’s franchisee, filed for bankruptcy Wednesday and will put its burger restaurants up for sale as it continues to hold discussions over the fate of its pizza outlets, WSJ Pro Bankruptcy reported. The company, which operates more than 1,200 Pizza Hut locations and about 400 Wendy’s Co. restaurants, had been struggling even before the coronavirus pandemic forced many of its eateries to close. The company nearly filed for chapter 11 earlier this year before a group of lenders threw it a financial lifeline. The company said that the Pizza Hut chain has been a particular drag on NPC for years, amid steep competition from rivals and Pizza Hut parent Yum Brands Inc.’s reluctance to invest in the chain, according to a filing in the U.S. Bankruptcy Court in Houston. Nevertheless, if all goes well in bankruptcy, NPC intends to reorganize around its Pizza Hut eateries and emerge from chapter 11 under new ownership. NPC was in default on payments owed to the Pizza Hut parent when it filed for bankruptcy, court filings show. The franchisee has nearly $900 million in debt.
Macy’s Inc. reported a staggering $3.58 billion quarterly loss yesterday as coronavirus-related store shutdowns resulted in a $3 billion impairment charge, Reuters reported. “While our stores are reopened, we expect that the COVID-19 pandemic will continue to impact the country for the remainder of the year,” Macy’s chief executive, Jeff Gennette, said in a statement, adding that the department store operator does not expect another total shutdown of stores. Macy’s, which also owns Bloomingdale’s, said net sales for the fiscal first quarter ended May 2 nearly halved to $3.02 billion. Macy’s, which on June 25 said that it would lay off about 3,900 employees in corporate and management positions in a bid to save cash, did not provide an updated outlook. In response to the market changes, Macy’s has invested heavily in improving its digital business and personalized marketing, clearing out unsold inventory and offering services like curbside pickup.
More U.S. retail companies sought bankruptcy protection in the first half of 2020 than in any other comparable period. Energy filings piled up at the fastest pace since oil prices plunged in 2016, data compiled by Bloomberg show. There have been 75 filings among all companies with liabilities of at least $50 million in the last three months, matching the same period of 2009, the second-worst quarter ever. Signaling more trouble ahead, the universe of issuers with bonds trading at distressed levels expanded for the first time since April. Three retailers filed last week, including Grupo Famsa SAB de CV, CEC Entertainment Inc. and GNC Holdings Inc. That made 16 bankruptcies for the year-to-date, the most ever for the first six months of a year, according to Bloomberg data going back to 2003. The sector remains under pressure from lockdowns that are crushing demand. The energy sector is the second-biggest contributor to this year’s bankruptcy surge, with June’s seven oil and gas filings matching the April 2016 peak. Chesapeake Energy Corp.’s insolvency highlights risk lurking in the shale sector, which remains under pressure from weak global demand.
Five U.S. restaurant companies have recently found suitors to acquire them out of bankruptcy, in contrast to the host of troubled retailers failing to attract buyers amid the COVID-19 pandemic, the Wall Street Journal reported. Chains that own casual-dining brands including Krystal, Logan’s Roadhouse, Gordon Biersch, Bar Louie, Brio, Bravo and the U.S. division of Le Pain Quotidien have all found takers for their bricks-and mortar locations after filing for bankruptcy protection this year. The buyers are betting that restaurants will rebound after the pandemic. That view doesn’t extend to retailers that have struggled to adapt to changing consumer preferences; the growth of e-commerce, particularly Amazon.com Inc.; and the obsolescence of malls. None of the major bricks-and-mortar retailers that filed for bankruptcy in 2020 looking for a buyer has been able to sell its stores, according to BankruptcyData.com. The recent wave of retail bankruptcies has come as government-mandated coronavirus closures tipped struggling companies over the edge. Restaurants were ordered to close their dining rooms, though many have continued to serve customers through drive-throughs, carryout, curbside pickup and delivery. “A path to success for restaurants is clearer to an investor than one for retailers,” said Stephanie Lieb, a bankruptcy lawyer at Florida-based Trenam Law. One reason restaurants are often viewed as more attractive is their franchising models, which require less of a capital investment from the chain’s owner, said Aaron Cheris, a partner at Bain & Co. and head of its Americas retail practice.
