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Modell’s Sporting Goods, the century-old New York-area chain, has hired a trio of advisers including a chief restructuring officer in recent weeks in an effort to save itself after a poor showing over the holidays, said Mitchell Modell, chief executive and founding family scion, <em>WSJ Pro Bankruptcy</em> reported. Modell acknowledged that the company has stopped paying some landlords and some of its vendors, and has started talks with suppliers, trying to preserve cash and avoid bankruptcy. Modell’s has faced sagging sales and competition from big-box stores and online retailers. Recently, Modell’s spent millions of dollars on Jets, Giants and Yankees merchandise, which hasn’t sold well since the Yankees didn’t make the World Series and the Jets and Giants football teams had a lackluster season, Modell said. A relatively warm winter also hurt since demand for boots and sweatshirts was softer than expected, Modell said. The company will start talks with its landlords next week in hopes of reaping savings on rent, he said.

Forever 21 Inc.’s clothing suppliers say they are left with $120 million in unpaid bills following the company’s bankruptcy sale to mall owners and brand-licensing firm Authentic Brands Group LLC, WSJ Pro Bankruptcy reported. Bankruptcy Judge Kevin Gross said on Tuesday that he would approve the $81 million purchase of Forever 21’s assets by a consortium of the retailer’s largest landlords, Simon Property Group Inc. and Brookfield Property Partners LP, and Authentic Brands. His decision overruled objections brought by Forever 21 suppliers based in China, Hong Kong and South Korea that are faced with minimal or no recoveries on goods they sold to the fast-fashion chain during the bankruptcy on the expectation they would be paid in full before the case closed. The sale price for the retailer doesn’t cover those vendor bills. Instead, the $81 million in cash proceeds will mostly go to lenders, Forever 21 advisers said in Tuesday’s court hearing. Tyler Cowan, a Lazard Freres & Co. managing director advising Forever 21, said the money will pay down a $75 million balance on the company’s bankruptcy loan, as well as a further $3 million in fees and expenses.

Shares of Bed Bath & Beyond tumbled after the retailer reported disappointing sales numbers on Tuesday, leading Wall Street to believe a true turnaround is going to take more time than initially anticipated, CNBC.com reported. Shares, which had rallied roughly 53 percent in 2019, were last down more than 25 percent in trading yesterday. The company has a market cap of about $1.4 billion. Bed Bath & Beyond, which also owns Christmas Tree Shops and Buybuy Baby, said that sales during the first two months of the fiscal fourth quarter were hurt by heightened promotions, falling store traffic and inventory management issues. It said same-store sales, a key metric for the industry that tracks purchases at stores open for at least 12 months, during December and January dropped 5.4 percent. Analysts on average were expecting a drop of 3.97 percent for the fourth quarter, according to a poll by Refinitiv. Bed Bath & Beyond also faced inventory issues during the holidays. It said certain categories were too low or out-of-stock, hurting results.

The estate of Sears Holding Corp. is trying to take back payments it made to vendors — many of them small businesses — more than a year ago as it tries to shore up funds to wrap up its bankruptcy case, Bloomberg News reported. The company is seeking bankruptcy court approval of streamlined procedures for about 730 preferential transfer lawsuits it recently filed. The lawsuits, known as adversarial proceedings, were filed against creditors that received payments for services or products in the 90-day period immediately before the bankruptcy filing, called the preference period. While the motion is standard procedure in a bankruptcy, the size and scope is unusual, said <b>David Wander<b> a partner at Davidoff Hutcher & Citron LLP. “In Sears there are many more of them,” said Wander, who represents a number of Sears vendors and creditors. In addition to the recent filings, the estate filed about 400 in November and is expected to file additional lawsuits that in total will impact as much as 2,000 vendors, according to court papers. The Sears estate will use the funds to pay administrative expenses related to the bankruptcy. For the small businesses affected, it is a bit of a lose-lose situation, Wander said. While the vast majority will settle, many for a repayment far less than the bankrupt retailer originally asked for, the legal fees alone may be financially debilitating, he added. This is not the first time Sears estate has had issues with its vendors. In December, some companies that were owed money by the retailer, expressed concern that they would not receive payments. Read more.

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Stage Stores Inc. is preparing for a financial restructuring that could include a bankruptcy filing as the discount retailer contends with persistent losses at its department store outlets, WSJ Pro Bankruptcy reported. The publicly listed, Houston-based company has recently been late in paying its vendors amid a liquidity squeeze. The company is likely to file for chapter 11, although the situation remains fluid and Stage Stores could complete an out-of-court debt restructuring process, according to the people. The company is working with Joshua Sussberg, a restructuring lawyer at the law firm Kirkland & Ellis, the people said. It is also working with real estate advisory firm A&G Real Estate Partners, said one of the people, as well as consulting firm Berkeley Research Group. Stage Stores operates several department store brands, including Gordmans, Bealls and Goody’s. The company is working on converting substantially all of them into off-price Gordmans outlets and planned to close 40 stores in fiscal 2020. It aims to operate a total of 700 off-price stores by the third quarter of fiscal 2020. Stage Stores acquired Gordmans out of bankruptcy in 2017.

U.S. Bankruptcy Judge Kevin Gross yesterday said in a hearing that he would approve the sale of the retailer to its two largest landlords — Simon Property Group Inc. and Brookfield Property Partners LP — and Authentic Brands Group LLC, marking the end of control by the Chang family, Bloomberg News reported. Forever 21 was a creation of its founders, Korean immigrants who built the Los Angeles-based chain into an international empire, but it fell into trouble after failing to keep up with consumers’ tastes, among other problems. The new owners have agreed to pay $81 million in cash and assume certain liabilities, including $53 million in merchandise not yet paid for, Aparna Yenamandra, a Kirkland & Ellis LLP attorney representing Forever 21, said in the hearing. The deal preserves about 25,000 jobs at Forever 21, Tyler Cowan, Forever 21’s investment banker and a managing director at Lazard Ltd., said in the hearing. Another unidentified potential buyer was trying to pull together a bid for the retailer as recently as last weekend, but was unable to secure the necessary financing, Cowan said. Court papers show the buyers have the right to close stores, and it wasn’t immediately clear how many would remain open. The beleaguered retailer once operated about 800 stores in more than 40 countries. Read more.
https://finance.yahoo.com/news/judge-approve-forever-21-sale-214642870…

In related news, analysts are split about whether Simon Property Group Inc.’s bid to rescue a distressed fast-fashion retailer will succeed, but even skeptics say the mall giant may have little choice but to salvage one of its most important tenants, the Wall Street Journal reported. Simon Property, Brookfield Property Partners LP and Authentic Brands Group LLC made an $81 million bid for Forever 21 Inc. last week. The retailer now says it will go ahead after no rival bids emerged. Simon Property counted 98 Forever 21 stores occupying 1.5 million square feet in its U.S. portfolio at the end of the third quarter, filings show. That made it the landlord’s seventh-biggest tenant in terms of one rent metric, the percentage of total base minimum rent, though Forever 21 dropped to 12th in the fourth quarter after the landlord reduced rent. Simon Property said Monday it was also buying rival mall owner Taubman Centers Inc. in a $3.6 billion cash transaction. Read more. (Subscription required.)
https://www.wsj.com/articles/stakes-run-high-for-mall-owner-trying-to-s…

Forever 21 Inc. is moving forward with a sale to a group of buyers that includes Simon Property Group Inc. after no rival bidders qualified to challenge the offer, according to court filings, the Wall Street Journal reported. A group made up of Forever 21’s biggest landlords — Simon and Brookfield Property Partners LP — along with Authentic Brands Group LLC, a brand licensing firm, has offered $81 million for the bankrupt fast-fashion retailer. Forever 21 said on Sunday that it was scrapping a planned auction for yesterday after it didn’t receive any other qualified offers. The landlord takeover is similar to Simon Property’s acquisition of mall-based retailer Aéropostale Inc. in 2016. In that sale, the real-estate investment trust teamed with Authentic Brands and General Growth Properties on the deal.

As bankruptcies and store closures pile up among brick-and-mortar retailers, investors are increasingly concerned about mall operators, according to a Bloomberg News commentary. For the most part, those worries have centered on the landlords who operate dying malls. But as shoppers increasingly opt to stay home and embrace the convenience of online shopping, concern has extended to Simon Property Group Inc. and Taubman Centers Inc., high-end landlords that have each seen their shares hammered over the past year. Now, the rivals are poised to fight the retail woes together. On Monday, Simon announced it’s buying Taubman for $3.6 billion — a bid to expand by gobbling up a competitor. With malls under pressure to give customers a reason to leave their couches, they’re being forced to make costly improvements to the properties and add attractions like better dining options. Taubman, which owns about two dozen malls, needs to reinvest in its U.S. properties and Simon could help provide the capital required to do so, according to Lindsay Dutch, an analyst at Bloomberg Intelligence.