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A bankruptcy judge has refused Sugarfina Inc.’s request to begin drawing from a $4 million chapter 11 loan because of high fees on the debt, WSJ Pro Bankruptcy reported. The six-month loan carries an 8 percent annual interest rate, a 7 percent “success fee” tied to a sale of Sugarfina’s assets and a repayment premium, court papers say. Judge Mary F. Walrath said that the fees are a way for lenders to extract money from Sugarfina, which “quite frankly is a little offensive to me,” at a hearing on Monday in U.S. Bankruptcy Court in Wilmington, Del. The bankruptcy loan matures within six months after Sugarfina filed bankruptcy or following a sale of the candy retailer’s assets in chapter 11, which could close in 60 to 90 days, court papers say. Referencing the fees, Judge Walrath said the effective annualized interest rate on the loan could be between 50 percent and 75 percent. Judge Walrath said that was excessive.

Discount retailer Fred’s Inc. has filed for bankruptcy protection and will shut down all of its stores after trying unsuccessfully for more than a year to turn around the company, WSJ Pro Bankruptcy reported. The 72-year-old company, which filed for chapter 11 Monday in the U.S. Bankruptcy Court in Wilmington, Del., has begun liquidation sales and said in court papers it expects to close all of its remaining retail stores in the next 60 days. The Memphis, Tenn.-based retailer has been struggling for some time, closing more than 440 underperforming stores through four rounds of closures that extended from April until last month, Fred’s Chief Restructuring Officer Mark Renzi said in a court declaration. Following the closures, Fred’s said in July it would have about 80 retail stores remaining. The company said that it expects to continue fulfilling drug prescriptions at most of its pharmacy locations while continuing to pursue the sale of its pharmacies as part of the court-supervised proceedings. Fred’s has lined up a bankruptcy financing package with its existing lenders Regions Bank and Bank of America Corp. that would provide for up to $35 million in new funding, subject to bankruptcy court approval. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Sugarfina Inc., the chain of luxury candy shops backed by some of the biggest names in banking and entertainment, filed for chapter 11 bankruptcy protection as mall-based stores struggle to compete, Bloomberg News reported. Locations are scattered around Manhattan landmarks such Rockefeller Center, and other cities that include Los Angeles, Dallas, San Francisco and Toronto, according to its website. The company listed assets and liabilities of up to $50 million in its bankruptcy petition. The privately held string of candy boutiques counts rock star Bono (Paul David Hewson) and Goldman Sachs Group Inc. Chief Executive Officer David Solomon among its minority shareholders, court papers show. Neither is likely to see his fortunes seriously impaired, which each of them listed as holding less than a 1 percent stake. Private-equity firm Great Hill Partners LLC provided $35 million of equity financing to the company in 2017, according to a statement at the time. Sugarfina launched online in 2012 and opened its first boutique in Beverly Hills in 2013.

Sears is laying off about 250 employees at its Hoffman Estates, Ill.-based headquarters, but there are “no current plans to close the entire facility,” the retailer said in a notice filed with the state, the Chicago Tribune reported. The retailer, which emerged from bankruptcy in February, sent a letter to the Illinois Department of Commerce and Economic Opportunity that said it is implementing a permanent workforce reduction over a 14-day period, beginning Oct. 28. The terminated employees are not represented by a union, the company said in the Aug. 29 letter to the state. Sears had 4,411 employees in Hoffman Estates and its Loop satellite office as of January 2017, according to state filings. In June 2017, Sears told the Chicago Tribune that it had fallen short of the 4,250 employees needed to remain eligible for state tax credits. Since then, Sears has announced the elimination of more than 1,100 jobs, mostly in Hoffman Estates. The company said it had 68,000 total employees, including 32,000 full-time workers, when it filed for bankruptcy last fall.

Loot Crate Inc., the “geek and gamer” subscription business backed by actor Robert Downey Jr.’s venture-capital firm, plans to sell itself for more than $30 million to a creditor that will use the debt it is owed as currency, the Wall Street Journal reported. The proposed deal with a Money Chest LLC affiliate will be subject to higher and better bids in a potential auction supervised by the U.S. Bankruptcy Court in Wilmington, Del. Money Chest is a lender and bondholder affiliated with an investor group that includes a large collectibles maker and distributor. Loot Crate said that when it filed for bankruptcy in August that it planned to sell itself to Money Chest. But at the time, no price tag was put on the anticipated purchase. Money Chest also is agreeing to provide a loan of up to $10 million to help Loot Crate get through bankruptcy. Loot Crate on Thursday submitted its purchase agreement with Money Chest affiliate Loot Crate Acquisition LLC to the court. The offer, which would serve as the floor price for Loot Crate assets, includes a $30 million credit bid, plus “many millions” of dollars to cover sales taxes, in addition to other costs, Mark Duedall, a Bryan Cave Leighton Paisner LLP lawyer representing Loot Crate, said at a hearing Tuesday.

Popular singer Ariana Grande has sued Forever 21 for $10 million, accusing the fashion retailer and a beauty company started by its billionaire founders’ daughters of piggybacking off her fame and influence to sell their wares, Reuters reported. In a complaint filed on Monday, Grande said Forever 21 and Riley Rose misappropriated her name, image, likeness and music, including by employing a “strikingly similar” looking model, in a website and social media campaign early this year. She said that this followed the breakdown of talks for a joint marketing campaign because Forever 21 would not pay enough for “a celebrity of Ms. Grande’s stature,” whose longer-term endorsements generate millions of dollars in fees.

Forever 21 Inc. is preparing for a potential bankruptcy filing as the fashion retailer’s cash dwindles and turnaround options fade, Bloomberg News reported. The company has been in talks for additional financing and working with a team of advisers to help it restructure its debt, but negotiations with possible lenders have so far stalled. Focus has thus shifted toward securing a potential debtor-in-possession loan to take the company into chapter 11, sources said, even as some window remains to strike a last-minute deal that keeps it out of court. Forever 21 is one of the biggest mall tenants still standing after a wave of bankruptcies in the retail sector. Indianapolis-based Simon counts Forever 21 as its sixth-largest tenant excluding department stores, with 99 outlets covering 1.5 million square feet, according to a filing as of March 31. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Hudson’s Bay Company is selling Lord & Taylor to clothing rental subscription service Le Tote for $100 million, CNBC.com reported. The deal allows the department store chain to continue and potentially transform operations as its sales have fallen and it’s lost touch with today’s shoppers. It will also allow Hudson’s Bay, owner of Saks Fifth Avenue and Hudson’s Bay in Canada, to further simplify its business, as Executive Chairman Richard Baker looks to take the company private while the retailer grapples with sweeping industry change. Hudson’s Bay will be paid $99.5 million Canadian dollars ($75 million) in cash after the deal closes and a secured promissory note of CA$33.2 million ($25 million) is payable in cash after two years. Hudson’s Bay will also receive an equity stake in Le Tote, two seats on its board and certain rights as a minority shareholder. Under the deal, Le Tote will acquire Lord & Taylor’s brand and intellectual property and assume operations of 38 stores, its digital channels and its inventory. In fiscal 2018, Lord & Taylor generated $1.4 billion, or roughly 14 percent of Hudson’s Bay’s $9.4 billion in retail sales. Hudson’s Bay has a market value of CA$1.8 billion ($1.35 billion).

Landry’s LLC, the owner of Bubba Gump Shrimp Co., Morton’s The Steakhouse, McCormick & Schmick’s and other chains, has made a $37.2 million offer to buy Restaurants Unlimited Inc.’s assets out of bankruptcy, WSJ Pro Bankruptcy reported. Restaurants Unlimited said in court papers yesterday that it would name Landry’s as the stalking-horse bidder at an upcoming auction, subject to bankruptcy court approval. Restaurants Unlimited filed for protection from its creditors in the U.S. Bankruptcy Court in Wilmington, Del. in July. The company has 35 full-service restaurants under brands that include Kincaid’s, Palomino, Henry’s Tavern, Stanford’s, Clinkerdagger and Cutters Crabhouse. It owes about $39 million to secured lenders and operates in six states, including Washington, Oregon and California.