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Edward Lampert has been at the helm of the new Sears for just weeks, but the retailer is already sparring with the old company left behind in bankruptcy as well as with Stanley Black & Decker Inc., WSJ Pro Bankruptcy reported. Lampert’s new Sears, known as Transform Holdco LLC, claims the old Sears, still known as Sears Holding Corp., intentionally delayed payments to vendors and shortchanged it on promised inventory, breaching the purchase agreement between the two companies. Lampert’s hedge fund, ESL Investments Inc., paid $5.2 billion for 425 Sears and Kmart stores in early February after a bankruptcy-court auction. The new Sears, which does business as Sears and Kmart, claims the old company — before the sale closed — delayed payments to vendors, mischaracterized credit-card receivables and didn’t acquire the promised amount of inventory. The problems also include an issue raised during the three-day sale hearing, in which ESL refused to assume $166 million in liabilities but later moved forward with the purchase. The bankruptcy judge didn’t rule on the disagreement at that time, as he was in favor of seeing the sale move forward and the issue being later resolved. Read more. 

One of the worst outcomes for a business owner is having a major customer file for bankruptcy and leave behind a large unpaid account receivable. ABI's Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy provides an insider’s look into the options available to help screen a business’s customers, plan for worst-case scenarios, and, if the situation does arrive, efficiently handle the fallout. 

It’s been a bumpy road for Norfolk’s House of Maya Bridal Salons since it abruptly closed in August 2017, but former owner Maya Holihan may have finally come to the end of lawsuits and a $4.4 million debt, including unpaid taxes, business loans, and other debt, the Virginian-Pilot reported. According to court records, Holihan and her husband, Robert Holihan, paid $16,487 to the Internal Revenue Service and $2,850 to bankruptcy trustee John McLemore. The rest of the millions of debt was discharged, including more than $760,000 owed to Old Point National Bank and roughly $255,000 owed to BB&T. The bankruptcy case was filed on April 19, 2018 and finalized the following December. Holihan’s business troubles in court began when judges in two lawsuits ordered her and her business Maya Couture LLC to pay more than $87,000 in back rent and credit card debt to a former landlord in Ghent and American Express Bank, respectively. Judges previously ordered her to pay around $200,000 in rent and more than $30,000 in credit card debt. Former employees and vendors also sued for a total of $15,000.

Charlotte Russe will close all of its stores and is in negotiations to sell its intellectual property, USA Today reported. “We are partnering with the buyer and remain in talks to sell the (intellectual property), are optimistic about the future of the brand, and remain in ongoing negotiations with a buyer who has expressed interest in a continued brick and mortar presence to continue to serve our loyal customers in the future,” the fashion retailer said. In a court hearing in Wilmington, Delaware, Judge Laurie Selber Silverstein yesterday approved the sale of Charlotte Russe's assets to SB360 Capital Partners LLC, a liquidation company. According to court documents, store liquidation sales "shall commence no later than March 7" and end "no later than April 30." The San Diego-based mall chain filed for chapter 11 bankruptcy protection in early February and outlined plans to close 94 stores. The chain also put itself up for sale and said if it didn't find a buyer it would liquidate.

Sears was sued yesterday by Stanley Black & Decker Inc., which accused it of breach of contract and trademark infringement over its new line of professional-grade mechanics tools under the Craftsman Ultimate Collection brand, Reuters reported. Craftsman had been an iconic Sears brand before Stanley paid about $900 million for it in March 2017, while giving Sears what it called a “limited” license to sell some Craftsman products. But according to the complaint, Sears breached the license agreement by launching its new tool line and touting its stores as “the real home of the broadest assortment of Craftsman.” Stanley said the tagline falsely implies that other Craftsman products are “somehow illegitimate.” It also said Sears’ actions threaten to confuse shoppers and irreparably harm Stanley’s own Craftsman brand and trademarks, as well as its goodwill and customer relationships. Sears emerged from chapter 11 in February after longtime Chairman Edward Lampert, who oversaw its years-long descent into bankruptcy, won court approval for a $5.2 billion takeover, which included the Craftsman licensing rights.

Jeans maker and retailer Diesel USA Inc. has filed for bankruptcy protection, beset by changes in consumer buying habits that are plaguing other traditional retailers as well as internal missteps made by the company’s former leaders, WSJ Pro Bankruptcy reported. Diesel plans to make its trip through chapter 11 a quick one, with hopes of seeing its reorganization plan — which calls for Diesel to leave bankruptcy with fewer stores and a revamped business plan — receive court approval by April 11, according to court papers filed Tuesday. “The new management team has formulated a new strategic path over the next three years to restore the Diesel brand in the U.S., return the [company] to its pre-recession profitability, ensure its ability to continue operating in the U.S., and preserve hundreds of jobs in addition to creating new ones through opening new stores,” Mark Samson, Diesel’s chief restructuring officer, said in court papers. Because of its loyal customer base, some of Diesel’s stores as well as its wholesale and online operations have remained profitable, “though in need of growth,” Samson said. The U.S. entity is a part of Italian company Diesel SpA, which isn’t under bankruptcy protection. Diesel was founded overseas in 1978 and later launched in the U.S. in 1995.

Munchery Inc., a food delivery service once valued at $300 million, has filed for bankruptcy and plans to sell its main facility and equipment to airline catering business Gate Gourmet Inc., WSJ Pro Bankruptcy reported. South San Francisco, Calif.-based Munchery, which stopped operating in January as its financing ran out, has liabilities of about $35 million, including $3 million owed to thousands of customers who have balances on gift cards, according to a filing last week in U.S. Bankruptcy Court in San Francisco. The company listed $1 million to $10 million in assets, which include a lease and equipment at a 70,000-square-foot facility in South San Francisco. Munchery laid out several reasons for its chapter 11 filing: an overly aggressive expansion, intensifying competition, rising costs, and the impact that bad publicity about Blue Apron Holdings Inc.’s financial stumbles had on smaller meal-delivery startups trying to maintain financing.

Neiman Marcus Group’s proposal to take more time to pay back its debt is tantamount to a deal with the devil, according to one hedge fund, Bloomberg News reported. The Dallas-based retailer said last week that it had reached a preliminary agreement with a majority of its bondholders and lenders giving it three additional years to pay them back and allowing the struggling retailer more time to turn itself around. As part of that agreement, the company would swap current borrowings for new obligations. That exchange will end up helping some investors that made side bets against the company in the credit derivatives market, according to a letter from Dan Kamensky, founder of hedge fund Marble Ridge Capital. The investment firm is a Neiman Marcus bondholder that is suing the retailer over a subsidiary that it transferred. “This seemingly innocuous provision is a spectacular ‘Devil’s Bargain,’ presumably struck by the company at the behest of the sponsors to create a massive windfall for a subset of creditors betting against the company,” Kamensky wrote, referring to Ares Management LP and Canada Pension Plan Investment Board, the investors that own the retailer.

As Gap Inc. plans to separate from its Old Navy brand, the mall-based retail chain is looking to add a bankrupt children’s clothing retailer to its portfolio, the WSJ Pro Bankruptcy reported. Gap is in discussions to acquire Gymboree Group Inc.’s Janie and Jack stores and brand. Janie and Jack is Gymboree’s high-end brand that has outperformed its parent. In addition to purchasing Janie and Jack’s brand and inventory, Gap is also looking to buy the brand’s stores as well as the intellectual property, brands and websites related to Gymboree. Gymboree, which filed for bankruptcy in January, currently operates more than 900 stores, including 102 stores and 45 outlets under the Janie and Jack banner. The remainder of the stores are being liquidated. In total, Gymboree employs about 10,100 people.

Neiman Marcus Group Ltd. said in regulatory filings on Friday that it has made significant progress in reaching a deal with bondholders to extend its repayment deadline to 2023, WSJ Pro Bankruptcy reported. The deal isn’t final and discussions continue. An agreement to extend debt maturities would allow the retailer to avert a possible default when $5 billion in debt is set to come due in the next two years. The company has been engaged in talks with two separate groups of bondholders and lenders in recent weeks over debt swaps that would allow the company to push out due dates on nearly $5 billion in debt maturing in 2020 and 2021, the company said. Neiman Marcus’s debt load is the result of two buyouts by private-equity firms. The most recent deal was struck in 2013, when Ares Management LLC and the Canada Pension Plan Investment Board acquired the company for $6 billion. The negotiations are the second round of talks for the luxury department-store chain. A round of discussions last November ended with no deal. This time the company added a number of sweeteners to the deal, including a slice of preferred equity in MyTheresa, the company’s valuable international e-commerce unit, and the promise to pay down a portion of the company’s loans.