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Chewy Inc., the pet-products e-commerce platform owned by PetSmart Inc., increased the price range for shares in its upcoming initial public offering, seizing an opportunity to raise cash to pay down debt and bolster the parent company’s balance sheet, WSJ Pro Bankruptcy reported. Chewy, the biggest online shopping website for pet products, said yesterday in regulatory filings that it will now go public at a price of $19 to $21 a share, up from a previous range of $17 to $19 a share. The higher offering price means both PetSmart and Chewy will rake in additional proceeds from the transaction—more than $684 million and $106 million, respectively, rather than $612 million and $95 million, respectively. PetSmart had rushed to settle an ongoing legal battle with creditors over Chewy just in time to take advantage of the hot IPO market for tech companies that has included offerings by Uber Technologies Inc. and Pinterest Inc. Under a settlement between PetSmart and its creditors, the company pledged to use about $280 million of the proceeds of its shares in Chewy to pay down top-ranking PetSmart loans and bonds. The rest of PetSmart’s IPO proceeds will remain in an unrestricted subsidiary called Buddy Chester.

A thriving market for IPOs is helping ease tensions between a pair of struggling retailers and their lenders, as Neiman Marcus Group Ltd. and PetSmart Inc. explore selling their e-commerce platforms, WSJ Pro Bankruptcy reported. In recent months, both retailers have resolved disputes with creditors in large part by promising to pay them with proceeds from initial public offerings or sales of their online businesses. The quarrels centered on the transfer of stakes in those businesses out of the reach of creditors and closer to their private-equity owners. Both cases show how the recent rush of IPOs is having unexpected consequences, giving hope to owners and creditors alike that they can salvage returns—or at least reduce losses—in troubled investments. They also prove that private-equity companies can claim valuable pieces of financially challenged businesses, something debt investors fear could become more common as the terms of debt agreements become more borrower-friendly. In the end, the owners of Neiman Marcus and PetSmart could strip assets from their properties because the terms of their debt allowed them to do so, “which is not something you’d see five years ago,” said John Dionne, a senior lecturer on private equity at the Harvard Business School.

Fast-fashion clothing chain Forever 21 Inc. tapped longtime legal counsel Latham & Watkins for restructuring advice, Bloomberg News reported. The move adds to signs that Forever 21 is looking for ways to avoid becoming the next victim of the industry shakeup that has forced dozens of long-established chains into bankruptcy or out of business. The retailer operates hundreds of stores, and closing some is one option management might need to consider as part of a turnaround plan. International operations also have been a drag on the the Los Angeles-based company, but those would have to be restructured separately. The company carries about $500 million of debt in the form of a first-lien asset-based revolver that matures in 2022, according to data compiled by Bloomberg.

A group of investors this week set plans in motion to take Hudson’s Bay Co. private, hoping to fix the business out of the public eye. But going private won’t solve the company’s biggest problem: It owns department stores, a segment of retailing that has been losing share for years to discount chains, e-commerce companies and other upstarts, the Wall Street Journal reported. Along with its namesake Canadian chain, the company owns Saks Fifth Avenue and Lord & Taylor. Its stock was down nearly 50 percent over the past year before the roughly $1.3 billion takeover offer that was made public on Monday sent its shares soaring. Analysts and investment bankers say that they expect more retailers to try to go private as they struggle with the shift to online shopping. Hudson’s Bay Co. Chairman Richard Baker and his partners say that they will be better able to invest for the long term without public scrutiny and the need to report quarterly earnings. The group, which controls 57 percent of the outstanding Hudson’s Bay Co. shares, plans to finance the deal mostly with proceeds from the sale of its German operations, forgoing the need to raise a large amount of debt. Read more. (Subscription required.) 

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. 

New York oyster bar Maison Premiere and French restaurant Sauvage — which both share the same owners — have filed for chapter 11 protection, though both are still open, Eater reported. Maison Premiere, a James Beard Award-winning bar, and Sauvage have collectively racked up $3.2 million in outstanding debt to banks and other entities, according to court documents. Based on the court filings, the largest creditor between the two restaurants is New Jersey’s Provident Bank — with nearly $2 million owed by Maison Premiere alone, according to court documents. Attorney Doug Pick says that the $2 million debt is guaranteed by Sauvage. Out of the remaining debt from the two entities, $587,000 represents the salaries and loans owed to the owners themselves, and another $200,00 belongs to loans made back and forth between the two restaurants, he said.

99 Cents Only Stores LLC’s recent deal with its backers and creditors will shave off a large chunk of debt and bolster the cash on its balance sheet, WSJ Pro Bankruptcy reported. Private-equity owners Ares Management Corp. and the Canada Pension Plan Investment Board have engineered two debt-restructuring pacts in as many years for the discount retailer they purchased in 2012. As part of the deal, Ares made a $34 million cash infusion in the retailer that will be used to pay down some of the company’s third-lien bonds and to bolster the company’s liquidity, the person also said. The deep-discount retailer remains profitable, but profit margins are under pressure from competition from larger discount retailers and Amazon.com Inc. The company embarked on a debt-restructuring deal to lighten its debt load, the person familiar with the matter added. 99 Cents generates about $85 million in annual earnings before interest, taxes, depreciation and amortization, the person added. Rating company Standard & Poor’s Global Rating cut 99 Cents’ rating three notches Friday to CC, citing the deal converting its second-lien term loans and secured bonds to equity.

The corporate parent of the Perkins and Marie Callender’s restaurant chains might be sold through a potential bankruptcy filing, WSJ Pro Bankruptcy reported. Perkins & Marie Callender’s LLC spokeswoman Vivian Brooks said in an email that a buyer may want to purchase the company’s assets in bankruptcy because a filing would allow a buyer to purchase the business “free of certain liabilities and obligations.” She added that a potential bankruptcy filing should be viewed in the context of facilitating a sale rather than the restaurant company requiring court protection out of “financial necessity or performance issues.” Same-store sales are up 5 percent year to date at Perkins and nearly 7 percent at Marie Callender’s, she said. The company owns and franchises about 400 Perkins in 33 states and Canada, according to its website. More than half of Perkins’ locations are in Minnesota, Pennsylvania, Ohio, Florida and Wisconsin. There are also about 50 Marie Callender’s locations in the U.S. and Mexico, according to the company. If the restaurant company does file, it would mark the second time the company has gone through bankruptcy in the last decade. The company filed for chapter 11 in 2011 and emerged from bankruptcy later that same year under a plan that swapped out senior bond debt for equity in the reorganized business.

More than 100 Kirkland & Ellis partners, and about 240 firm lawyers overall, billed time in the Toys “R” Us bankruptcy proceedings, netting the law firm more than $50 million, American Lawyer reported. A judge on Friday approved $56.2 million in fees requested by Kirkland, according to an order filed in the Eastern District of Virginia. Kirkland billed for 57,237.30 hours of work as debtor’s counsel over nearly a year and a half in the toy retailer’s chapter 11 proceedings. Toys “R” Us filed for bankruptcy in September 2017, marking the latest in a string of brick-and-mortar retail failures in the online shopping era. The company retained Kirkland to restructure its nearly $5 billion in debt, as previously reported by The American Lawyer. Kutak Rock, Goodmans and Munger, Tolles & Olson landed roles in the case. In all, 105 partners, 131 associates and two of counsel from Kirkland billed time on the case between the September 2017 bankruptcy filing and Dec. 17 2018. Its partner billing rates for the work ranged from $565.00 to $1,795.00, according to the firm’s final fee application.

Employees of bankrupt department-store chain Shopko Stores Inc. are demanding that the company’s private-equity sponsor provide severance to workers impacted by its liquidation, Bloomberg News reported. Shopko employees — organizing through the labor nonprofit United for Respect — released an open letter to Sun Capital Partners Inc. executives Marc Leder and Rodger Krouse on Friday to make their appeal. “Many of us have been left jobless and struggling to survive without severance for our years of service, and we are writing to you to demand accountability for Sun Capital’s actions,” read the letter, which asked that executives set up a fund for employees affected by the closures of the chain’s 350-plus stores. The move builds on the success of former Toys “R” Us workers, who successfully lobbied two of the chain’s private-equity owners, Bain Capital and KKR & Co., to create a $20 million hardship fund. Workers are increasingly speaking out to demand consideration during the bankruptcy process, buoyed by support from politicians, including some presidential hopefuls, in addition to the success of their peers.

Barnes & Noble Inc. agreed to be bought by hedge fund Elliott Management Corp. for about $475 million in cash, the companies said on Friday, setting up a new era for the troubled bookstore chain, the Wall Street Journal reported. The Journal on Thursday reported Elliott was the lead bidder in an auction for the company. Including the assumption of debt, the deal is worth $683 million. Once the transaction closes, expected in the third quarter, Elliott will own both Barnes & Noble and U.K. book chain Waterstones, which it bought last year. Each bookseller will operate independently but will both be led by James Daunt, chief executive of Waterstones, the companies said. Daunt said Elliott expects to invest in improving the appearance of Barnes & Noble’s 627 stores. “One of the cycles of bookstore chains is that you get a bit old,” he said. “Ultimately, if the lighting is poor, somebody needs to fix it. We’ll be investing.”