The estate for the former operator of the Perkins and Marie Callender’s restaurant chains received court approval to pay creditors under a consensual bankruptcy liquidation plan, Bloomberg Law reported. The payments, with funds from $72 million in asset sale proceeds, would allow the company to wind down in chapter 11 bankruptcy. After a negotiated settlement, Pancakes & Pies LLC, the liquidating entity formerly known as Perkins & Marie Callender’s, plans to set up a recovery pool for general unsecured creditors, who are projected to recover roughly $1.8 million on $14 million in allowed claims.
Sears Holdings Corp., the estate of the iconic department store left behind in bankruptcy, has agreed to settle litigation over new owner Edward Lampert’s $5 billion purchase of the retailer’s best stores for more than $18 million, The Wall Street Journal reported. Sears sold its best assets (including 425 of its most profitable stores) back to Lampert’s hedge fund, ESL Investments Inc., last year, and an ESL-backed company, Transform Holdco LLC, became the new owner. Fights between the “old” and “new” Sears over the payment terms of the transaction started almost immediately. “Disputes between Transform and the debtors regarding the meaning of certain provisions of the asset-purchase agreement arose before the ink even dried on the contract,” according to papers filed in U.S. Bankruptcy Court in White Plains, N.Y. Transform Holdco claimed that the old Sears intentionally delayed payments to vendors and shortchanged it on promised inventory, breaching the purchase agreement between the two companies. The old Sears, for its part, claimed it was owed at least $57.5 million by Transform. Under the settlement, Transform Holdco will pay Sears only $12 million in cash, court documents filed on Friday show. That money may ultimately go to paying off the old Sears’s vendors, former employees owed severance and tax authorities.
Loans tied to Save A Lot Inc. tumbled toward new lows amid talks about a restructuring that will give lenders control of the discount grocer and cut its debt by almost half, Bloomberg News reported. Save A Lot, backed by private equity firm Onex Corp., is seeking a deal with lenders that would keep it out of bankruptcy. If enough of those creditors don’t sign up, the company could opt for a pre-negotiated bankruptcy filing. In either scenario, Onex would give up its equity stake or be diluted in a debt-for-equity swap. The company’s $740 million first-lien loan fell to a bid-ask spread of 15 cents to 25 cents on the dollar Friday. About two-thirds of lenders agreed to defer taking action after Save A Lot missed a Dec. 31 principal payment on its loan, according to a company statement. Some have already agreed to provide $138 million of new capital to support operations as the grocer focuses on its turnaround plan. The chain had more than $820 million of net debt outstanding, comprised primarily of the loan due in 2023, and $24 million of cash as of June.
An Alabama mall owner is suing Forever 21 Inc., saying that it lost millions of dollars leasing space to the retailer based on misleading sales targets, Bloomberg News reported. Forever 21 is accused of misrepresenting sales projections for a store it opened in Allied Development of Alabama’s Eastern Shore shopping mall, promising yearly revenue of at least $6 million but delivering only about $1.6 million its first year in business, according to court documents filed Nov. 22. In 2017, Allied Development struck a deal with Forever 21 that allowed the apparel retailer to peg its rent payment to its monthly gross sales. The store would turn over 5 percent of its monthly sales, as well as a bonus of 1 percent of yearly sales in excess of $7 million, according to the agreement. But the retailer used false information to back up projections it gave as part of the deal, according to the filing. Forever 21 based the projections on sales at its nearby store in Mobile, Alabama, which it said had generated $6 million in 2017, Allied Development said in the court filings. That store generated only $2 million in gross sales during 2017, according to the court documents.
Pier 1 Imports Inc. is planning to dismiss about 40 percent of its headquarters staff and shut about 450 stores in an attempt to overhaul the troubled home furnishings business, Bloomberg News reported. The retailer has drafted a bankruptcy plan and last month made a presentation to creditors that envisioned a smaller company with about $900 million in annual sales. It’s also canceling some orders and has held talks with current lenders about providing chapter 11 financing. The company’s shares plunged as much as 30 percent on the news, and were hovering down about 17 percent at $5.175 when trading was halted. Pier 1 then reported a wider quarterly loss and confirmed it would reduce staff, shut almost half its stores and close some distribution centers. The headquarters staff cuts affect about 300 employees.
Bed Bath & Beyond Inc. has signed a deal to sell roughly half its real estate to a private-equity firm and lease back the space in a transaction that will generate more than $250 million in proceeds for the troubled home-goods retailer, the Wall Street Journal reported. The 2.1 million square feet of space sold to Oak Street Real Estate Capital LLC includes the company’s Union, N.J., headquarters, a distribution facility and an undisclosed number of its roughly 1,500 stores. Bed Bath & Beyond will continue to occupy the properties under long-term leases. The company is expected to evaluate the rest of its real estate and retail concepts, which include the Buy Buy Baby chain and Harmon drugstores. The proceeds will be used to repay debt, buy back shares and fund a turnaround effort under new Chief Executive Mark Tritton, who joined the company in November from Target Corp., where he was the chief merchant.
Save A Lot will hand its business over to creditors and receive $138 million in fresh capital under an agreement that aims to save the private equity-backed discount grocer from bankruptcy, WSJ Pro Bankruptcy reported. Save A Lot said on Friday that it will shed $400 million in debt under the restructuring deal, which has the support of creditors holding a two-thirds supermajority of the company’s term loan debt. The company expects the deal to close in the first quarter. Save A Lot, owned by Toronto-based Onex Corp. since 2016, needs the support of all its term lenders to close the transaction. If all the lenders don’t agree, the company could implement the deal through a speedy, pre-packaged bankruptcy process. Onex’s equity stake would be diluted or wiped out in either scenario. Save A Lot has more than 1,100 corporate and licensed stores in 33 U.S. states and 14 wholesale distribution centers. The company ran into financial difficulties even though consumer spending at discount grocers and club chains has been increasing in recent years, pressuring regional, middle-market companies.
Pier 1 Imports Inc. is planning a significant increase in store closings as the distressed home-furnishings chain seeks to cut costs and turn around operations, Bloomberg News reported. The company expects to announce the new round of shutdowns when it reports results for its third fiscal quarter next week, according to people with knowledge of the plan. The company aims to restructure out of court, in part by closing stores and using the savings to boost liquidity. Filing for bankruptcy is an option under consideration if Pier 1 falls short of its goals. The company also expects to disclose cuts in its debt load, listed at more than $300 million in its previous quarterly report. Pier 1 posted eight straight quarters of declining sales and six consecutive quarterly losses as shoppers defected to new e-commerce players like Wayfair Inc. and conventional giants like Walmart Inc. that have expanded in the category. Turnaround executive Robert Riesbeck took over as chief executive officer in November, almost a year after Pier 1 replaced a previous CEO and said that it would explore strategic alternatives.
Fairway Market, the New York City grocer that has been a staple on the Upper West Side for nearly a century, is on the verge of filing for bankruptcy — again, the New York Post reported. Known for its quality produce, prepared foods, cheeses and smoked fishes, Fairway is now preparing to seek bankruptcy protection this month after failing to find a buyer for its 14 stores. The chain may even lose its flagship store on Broadway and West 74th Street as competitors, including ShopRite, have toured the store with an interest in acquiring the real estate, sources say. Fairway’s downturn started in 2007 when the Glickberg family sold an 80 percent stake to private equity firm Sterling Investment for $140 million. Four generations of the family had owned and operated a handful of Fairways in NYC, starting with a fruit-and-vegetable stand that opened in 1933. Fairway quickly fell victim to Sterling’s aggressive expansion plan aimed at enticing suburban shoppers, which only served to burden the company with a crushing $300 million in debt. Sterling took Fairway public in 2013 and worked to transform the local city grocer into a national chain with 300 stores, including many in the suburbs.
