%1

Revlon Inc. said on Tuesday that it has emerged from bankruptcy after cutting more than $2.7 billion in debt and handing control of the beauty products company to its lenders, Reuters reported. CEO Debra Perelman said in a statement that Revlon is stronger after bankruptcy and well positioned for long-term growth. "We look forward to unlocking the full potential of our globally recognized brands and continuing to offer our customers the iconic products they have loved for decades," Perelman said. Revlon, which has a 91-year history selling lipstick, nail polish and other beauty products, filed for bankruptcy in June, saying that its $3.5 billion debt load and pandemic-related disruptions had left it too cash-poor to make timely payments to critical vendors in its cosmetics supply chain. Revlon has filled its post-bankruptcy board of directors with experienced executives from the consumer, retail, and beauty industries, including former Bloomin' Brands CEO Elizabeth Smith and former Sephora CEO Martin Brok. Revlon's lenders took ownership of the company in exchange for the debt-reduction agreement, wiping out the equity value of existing shareholders.

Revlon Inc. will emerge from bankruptcy under new ownership and a new board of directors that includes former executives from Bloomin’ Brands Inc., Sephora and Walgreens Boots Alliance Inc., the Wall Street Journal reported. The reorganized beauty products company’s new board was selected by Glendon Capital Management LP, King Street Capital Management LP, Angelo Gordon & Co. and Nut Tree Capital Management LP, lenders to the business that are taking control in chapter 11. Revlon’s bankruptcy ended nearly four decades of ownership by billionaire financier Ronald Perelman, who bought the company in 1985. It sought protection from creditors last year as it faced a heavy debt load, inflation and supply-chain pressures. Debra Perelman, his daughter, has been Revlon’s chief executive officer. She will remain CEO as well as a board member as it passes to new owners.

David’s Bridal LLC’s chief executive officer is betting the retailer’s reputation with brides will help it find a rescuer in bankruptcy, even in an era of backyard weddings and scaled-down events, Bloomberg News reported. David’s CEO Jim Marcum said in an interview that the company held discussions with private-equity firms and potential strategic buyers since the retailer filed chapter 11 and that he’s optimistic they’ll complete a sale to keep many of its nearly 300 locations open. Company advisers are fielding potential bids through the end of May, he said. “We have quite a few NDAs signed; we’ve got people doing a lot of work,” Marcum said. “It’s pretty active.” Facing a severe cash crunch, David’s was forced to file bankruptcy this month without a deal to sell the business in hand. The filing marks David’s second trip to bankruptcy court after it emerged in January 2019 from an earlier chapter 11 with a plan that slashed about $450 million in debt from its balance sheet. Marcum joined David’s in 2019 from Apollo Global Management and later oversaw an out-of-court restructuring that swapped another $276 million of term loan debt for equity in the business and injected $55 million in capital. Soon after, COVID-19 forced David’s to temporarily shut its stores and set off a major upheaval in the wedding industry, which still hasn’t fully recovered.

Hundreds of shopping centers across the U.S. are poised to lose their anchor tenant in the coming months after Bed Bath & Beyond Inc. filed for bankruptcy and announced plans to eventually close its remaining stores, the Wall Street Journal reported. While property owners will have to absorb additional costs to lure replacement tenants, and some might still struggle to fill large vacated spaces, many landlords say they aren’t worried. Demand for big-box space in open-air shopping centers remains strong despite rising interest rates, and plenty of other retailers are waiting in the wings to fill the spaces vacated by Bed Bath & Beyond, several real-estate executives said. New tenants will in most cases pay higher rents, too, these property owners say. “There is strong interest across the board in these locations,” said John Kite, chief executive of Kite Realty Group Trust, one of Bed Bath & Beyond’s biggest landlords, with 22 locations across its portfolio. “If this was going to happen, this is probably a pretty good time for this to happen.” Retail real estate struggled for years because of oversupply and the rise of online shopping. But the sector rebounded strongly over the past two years after pandemic lockdowns eased, shoppers returned to stores and retailers fine-tuned their mix of e-commerce and bricks-and-mortar locations. Nationwide, the retail availability rate fell to 4.8% in the first quarter, the lowest level since at least 2005, when real-estate firm CBRE began tracking the market.

Bed Bath & Beyond Inc. won permission on Monday to tap $40 million, money the retailer said it needs to cover payroll for its roughly 14,000 employees and buy management time to try and locate a buyer in chapter 11 bankruptcy to rescue some or all of its stores, Bloomberg News reported. Bankruptcy Judge Vincent Papalia in a hearing yesterday said the urgent funding provided by Bed Bath & Beyond’s lenders averts a potential “fire sale” and immediate liquidation of the 52-year-old retail chain. The financing approved Monday includes a May 28 deadline for bids on the company’s assets. But the money comes at a cost to junior creditors: in exchange for the $40 million, Bed Bath & Beyond agreed to roll-up $200 million in existing debt, moving that debt to the front of the chapter 11 repayment line. The retailer said in its bankruptcy petition it had roughly $4.4 billion in assets compared to more than $5.2 billion in total debt as of last year. Lawyers for lenders Sixth Street Specialty Lending Inc. and JP Morgan Chase Bank N.A. defended the roll-up, saying lenders went to extraordinary lengths to provide Bed Bath & Beyond runway as it pursued last-ditch equity raises in an ultimately failed attempt to avoid bankruptcy.

A decade ago, Bed Bath & Beyond was a brick-and-mortar star with a $16 billion market cap. With interest rates at near-zero for a decade, the company went on an acquisition binge, buying up companies such as Cost Plus World Market in 2012 and Decorist in 2017. Yet the big-box retailer was slow to adapt to the e-commerce era, according to a Wall Street Journal editorial. Target, Walmart, Home Depot and Lowe’s invested in improving their online and logistics operations, which enabled them to better compete with Amazon. Bed Bath & Beyond’s failure to do so was costly during the COVID government lockdowns as it racked up billions of dollars in losses. Investors indulged such losses as long as the Fed maintained its uber-accommodative policies, which made borrowing cheap and fueled speculative stock-buying. Bed Bath & Beyond’s stock price doubled between January 2020 and 2021 to $35 a share amid a rally in so-called meme stocks such as AMC and GameStop. But credit conditions tightened last year as the Fed raised rates, spurring the retailer last August to close 150 stores and cut its workforce by 20%. The belt-tightening enabled it to secure a $375 million loan to continue operating through the holidays, but it continued to struggle and reported another sales drop in the latest quarter. By the end of March, its market valuation had slumped to $70 million and its stock price had fallen below a dollar. The company could no longer raise capital or borrow to stay afloat, making bankruptcy all but inevitable. Thousands of workers may lose their jobs, but the good news is that plenty of companies are still hiring. Nobody celebrates a corporate bankruptcy and the human and financial harm that goes with it. But some companies inevitably fail in a dynamic economy, and the demise of unprofitable businesses enables labor and capital to move to more productive uses. Propping up so-called zombie companies suppresses economic growth and innovation. Read more. (Subscription required.)

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

Home-goods retailer Tuesday Morning Corp. is moving toward a liquidation of additional store locations following a bankruptcy auction for the company’s remaining assets, WSJ Pro Bankruptcy reported. If a Hilco Global unit closes on its bid for Tuesday Morning, the Dallas-based retailer will be liquidated, its senior vice president of finance, Dell Young, testified in bankruptcy court on Monday. Tuesday Morning last week selected Hilco as the successful bidder for more than 200 store locations that weren’t already designated as going out of business. Lenders to Tuesday Morning filed court papers Monday saying that a sale to Hilco likely would result in a liquidation of the business, which filed for bankruptcy in February for the second time in less than three years. “We are working with the company to develop the final detailed plan on which stores will close and do not have a specific number of store closings at this time,” said Ian Fredericks, president of Hilco’s consumer-retail group.

Bed Bath & Beyond Inc. filed for chapter 11 protection yesterday after the home goods retailer failed to secure funds to stay afloat, and has begun a liquidation sale, Reuters reported. The home goods retailer, which shot to popularity in the 1990s as a go-to shopping destination for couples making wedding registries and planning for new babies, has seen demand drop off in recent years as its merchandising strategy to sell more store-branded products flopped. Last year's moves to abandon that strategy, and to bring in more national brands that shoppers recognize, had not shown signs of working, with the company reporting a loss of about $393 million after sales plunged 33% for the quarter ending Nov. 26. The Union, N.J.-based retailer filed for bankruptcy in a District of New Jersey court, listing both its estimated assets and liabilities in the range of $1 billion and $10 billion, according to a court filing. The company said that it has received a commitment of approximately $240 million in debtor-in-possession financing from Sixth Street Specialty Lending Inc., according to a statement. While the retailer has begun a liquidation sale, it intends to use the chapter 11 proceedings to conduct a limited sale and marketing process for some or all of its assets, according to the statement. The company added that its 360 Bed Bath & Beyond and 120 buybuy BABY stores and websites will remain open and continue serving customers as it starts efforts to effect the closure of its retail locations.

Bed Bath & Beyond Inc. is preparing a bankruptcy filing for as early as this weekend as its falling stock price makes it near impossible to raise enough capital to avert default, WSJ Pro Bankruptcy reported. The embattled retailer recently said it needed to raise $300 million from share sales by April 26 to stay out of chapter 11. The company will have to stop selling stock by that date, when it would lose eligibility to continue under its share registration documents. Given the stock’s closing price on Wednesday of 46 cents, Bed Bath & Beyond faces long odds to raise that amount of money within that time. As of April 10, Bed Bath & Beyond had raised $48.5 million from its latest stock-sale effort. At the time, it had 178 million shares available to sell, which would only net the company about $70 million or $80 million given the stock’s recent trading prices. The retailer has warned that if it isn’t able to raise capital through its equity offering, it would have to file for bankruptcy and likely liquidate its assets. Bloomberg reported earlier Wednesday that Bed Bath & Beyond had resumed preparing for bankruptcy. The home-goods retailer’s business has been deteriorating. Bed Bath & Beyond in preliminary results reported a decline in comparable-store sales of 40% to 50% in the quarter that ended Feb. 25.