H/2 Capital Partners scrapped an auction for J.C. Penney Inc.’s term loan held by the hedge fund after a weak reception from potential buyers, Bloomberg News reported. Bids for H/2’s sale of about half J.C. Penney’s $1.7 billion term loan didn’t meet the seller’s minimum price by Thursday’s deadline. The hedge fund will continue to own its portion of the term loan, and no further auction is scheduled at this time. Deutsche Bank AG was shopping J.C. Penney’s first-lien term loan due in 2023 on behalf of H/2 Capital. The loan was quoted recently around 88 cents on the dollar, according to data compiled by Bloomberg.
The owner of the New York Sports Clubs chain is pitching a fresh deal to push out the looming debt maturity wall at the gym operator, Bloomberg News reported. Town Sports International Holdings Inc. has approached existing lenders to refinance its borrowings, which come due next year. The company is telling investors that $50 million in new capital will be made available if it’s able to refinance the loan. The new plan would fully pay down the first-lien loan in exchange for lenders rolling into a new, longer-dated term loan that would pay higher interest. The company is working with Deutsche Bank AG to help refinance the loan of about $178 million. The new $50 million financing will be structured as more junior ranking, second-lien debt.
ApplianceSmart Inc. — the retailer of new, closeout, out-of-carton and scratch-and-dent appliances — has filed for chapter 11 protection, the Minneapolis Star Tribune reported. ApplianceSmart has three locations, two in Minnesota and one in Ohio. At its peak, the company had 20 locations in the U.S., nine of them in Minnesota. Earlier this year ApplianceSmart closed three other Minnesota locations. Initial bankruptcy filings didn’t list a total number of assets and liabilities. They did list a range of $1 million to $10 million in assets and liabilities and 100 to 199 creditors. ApplianceSmart is owned by Las Vegas-based Live Ventures, a holding company of diversified businesses. Live Ventures acquired the retail business from Appliance Recycling Centers of America in April 2018 for $6.5 million.
Destination Maternity Corp. won court approval to liquidate its remaining stores after a judge rejected claims by a federal bankruptcy watchdog that a sale process, which might have saved part of the chain was “tainted” by conflicts, Bloomberg News reported. Bankruptcy Judge Brendan Linehan Shannon acknowledged that the structure of the deal he approved was unusual, but said he disagreed that there was an actual conflict of interest. Two retail liquidation specialists worked for Destination Maternity before teaming up on the winning bid to conduct going-out-of business sales for the chain. One of the liquidators also has ties to a key Destination Maternity lender. “There is at least an optical concern about a party wearing a number of hats,” Judge Shannon said. “But I don’t believe there is a meaningful conflict.” Under the deal, licensing company Marquee Brands LLC will get Destination’s name, website and other operating assets for about $50 million, while Hilco Merchant Resources and Gordon Brothers Retail Partners will run store-closing sales at its remaining 235 locations, with thousands of jobs likely to disappear, court papers show. The structure made it difficult for a rival to make a competing offer to buy the entire company as a going concern or to outbid Marquee for the intellectual property without first getting permission from Hilco and Gordon Brothers, according to Destination’s main financial adviser, Neil A. Augustine, with Greenhill & Co. The U.S. Trustee argued that Hilco and Gordon Brothers had an advantage in bidding on the right to wind down the chain because they had more access to information about Destination Maternity than other potential bidders.
Vendors who kept the shelves stocked for last year’s holidays during Sears Holding Corp.’s bankruptcy will finally get paid, the Wall Street Journal reported. Lawyers for Sears’s bankruptcy estate said on Wednesday in court fillings that they would distribute $21 million to vendors ranging from clothing company Levi Strauss & Co. to toy maker Hasbro Inc., starting today. The payout comes to about 33 cents on the dollar for about 270 vendors, court filings show. The vendors are taking a haircut despite supplying goods in the days leading up to Sears’s chapter 11 filing in October 2018. Sears sold off its best stores to Edward Lampert’s ESL Investments for $5.2 billion, and the estate filed a plan to distribute the proceeds to creditors and shut down.
Destination Maternity will be acquired by Marquee Brands, just weeks after the Moorestown, N.J.-based maternity wear retailer filed for chapter 11 protection, NJ.com reported. Marquee Brands was a stalking-horse bidder whose baseline bid last week was about $50 million. The deal is set to be finalized today, according to court papers. It is not yet known whether any or all Destination Maternity brick-and-mortar stores will close, but Marquee Brands is "evaluating all aspects of the current business, including its network of retail stores,” the company said in a statement. Destination Maternity had $260 million in assets and $244 million of debt, according to its bankruptcy filling. The brand was also delisted from the Nasdaq Stock Market on Nov. 18. The company operated 446 stores in the United States, Canada and Puerto Rico under the brands Motherhood Maternity, A Pea in the Pod and Destination Maternity.
The federal judge overseeing the bankruptcy of Sears Holdings Corp. appointed an examiner in the ongoing fight between the bankrupt estate of Sears and the ESL Investments Inc. unit that bought the company out of bankruptcy, according to a new court filing, Bloomberg News reported. Lawyers for the estate and the ESL subsidiary that bought the retailer, Transform Holdco LLC, haven’t been able to agree on three issues including the value of inventory the estate handed over to Transform when the sale closed. Michael Wyse, the managing director of Wyse Advisors LLC, will calculate final figures for the prepaid inventory shortfall, cash reconciliation and the specified receivables shortfall, according to the filing. Transform previously said the prepaid inventory shortfall was at least $72 million. Bankruptcy Judge Robert Drain ordered the estate and Transform to cooperate with Wyse and comply with any requests for documents or information. The two sides have been engaged in an ugly fight since shortly after the $5 billion sale was approved in February. The Sears estate sued ESL founder Eddie Lampert in April for allegedly transferring billions of dollars in company assets when the retailer was insolvent. Lampert sued the estate the following month for allegedly failing to deliver “hundreds of millions of dollars of assets” called for by the sales agreement.
The owners of ShoppingTown mall have begun making token payments toward their back taxes while they try to save the nearly vacant shopping mall in bankruptcy proceedings. But the court-ordered $25,000 monthly payments won’t put much of a dent in a delinquent tax bill that Onondaga County, N.Y., officials say exceeds $10.3 million, Syracuse.com reported. At that rate, it would take more than 30 years to clear the debt. As for current property taxes, a Pennsylvania bankruptcy judge overseeing ShoppingTown’s case slashed what the mall owners must pay while the bankruptcy proceeds. Judge Carlota Bohm issued an order last week setting ShoppingTown’s temporary tax payments and allowing the mall owners to borrow money while they try to restructure the mall’s finances. ShoppingTown Mall NY LLC filed for bankruptcy protection in August. In addition to the $25,000 monthly payments against back taxes, the mall owners must pay current school, town and county taxes while the bankruptcy case plays out, Bohm ruled. But current taxes will be based on a property value of $4.5 million — not the $36.7 million assessment set by the town of DeWitt, the judge ordered.
Destination Maternity Corp. canceled its bankruptcy auction and Marquee Brands LLC was declared the winner, making it likely that the chain’s stores will be shut down, Bloomberg News reported. The cancellation was disclosed in a court filing Monday, signaling that no other qualified bids were received by last week’s deadline. Plans previously outlined call for Marquee to shutter the brick-and-mortar outlets but keep the brand alive online and possibly inside department stores. Marquee will get the retailer’s name, website and other operating assets for about $50 million. Hilco Merchant Resources and Gordon Brothers Retail Partners would run store-closing sales at its remaining 235 locations, with thousands of jobs jeopardized, court papers show. Shutting the stores would add to the so-called retail apocalypse that has claimed more than 9,200 stores among small and large retailers. The industry is suffering from online competition, fewer shoppers at malls and too much debt that was piled on before those trends sapped profitability. The company filed for chapter 11 protection in October with about 3,200 employees, 436 stand-alone stores and another 423 store-in-store locations, including Macy’s, buybuyBABY, and Boscov’s, according to court papers. Less than a year earlier, it counted more than 1,100 retail locations in the U.S, Canada and Puerto Rico. Destination Maternity hasn’t posted an annual profit since 2014.
