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Neiman Marcus is hoping to capitalize on rebounding luxury sales by investing more than $500 million over the next three years in refreshing stores, speeding up deliveries and acquiring new technology, the Associated Press reported. The plan, unveiled yesterday, includes a pact to purchase Stylyze Inc., a tech startup that recommends outfits for customers based on past purchases and browsing history. Neiman Marcus has been working with the company since 2018 and decided to buy it outright because of its potential, according to the luxury retailer’s CEO, Geoffroy van Raemdonck. He says the machine learning technology has helped convert online browsers into buyers and enticed shoppers to keep coming back. Financial terms were not disclosed. Neiman Marcus emerged from chapter 11 protection last September, one of the most high-profile retail bankruptcies at the onset of the pandemic. Like many of its peers, the privately held department store chain was forced to temporarily close its stores for several months. However, the reorganization in bankruptcy court helped reduced its debt to $1.1 billion as of April, down from $5.1 billion a year ago. And Neiman Marcus currently has available liquidity of more than $850 million versus $132 million a year ago.

Candy retailer It'Sugar is slated to emerge from bankruptcy after nearly nine months of court proceedings, the South Florida Business Journal reported. The Deerfield Beach, Fla.-based chain is expected to finalize its chapter 11 reorganization process by the end of July, according to a statement from the company. When it does so, Fort Lauderdale-based BBX Capital will reacquire control of It'Sugar. The retailer had become its own entity when BBX restructured last year. It'Sugar filed for chapter 11 protection in September. At the time, BBX Capital said that the COVID-19 pandemic was to blame for It'Sugar's financial struggles. BBX Capital President Jarett Levan said tourism historically accounted for 60% of It'Sugar's annual sales and, at that point in the pandemic, travel was still at historic lows nationwide. On June 11, the U.S. Bankruptcy Court for the Southern District of Florida announced its intention to confirm It'Sugar's reorganization plan, according to the company. The confirmation order is expected to become final within a week, which will allow It'Sugar to officially emerge from bankruptcy proceedings after 30 days.

Lawsuits brought by white business owners challenging a policy that prioritized applicants for pandemic relief grants on the basis of gender and race have thrown the federal government’s Restaurant Revitalization Fund into turmoil, the New York Times reported. Tens of thousands of applicants who expected an easier path through the $28.6 billion aid program are now stuck in limbo, and nearly 3,000 restaurant owners whose grants were approved have been told they can’t be paid. The money is running out fast: The program has distributed $27.5 billion to about 100,000 applicants, an agency official said on Monday. When Congress created the Restaurant Revitalization Fund in March, lawmakers ordered the Small Business Administration, which runs the program, to include a 21-day exclusivity period. During that time, only applications from women, military veterans and “socially and economically disadvantaged” individuals — defined by the agency as those from certain racial and cultural groups who also had limited financial means — would be approved. Others could file their applications, but had to wait to have their requests reviewed. The fund began taking applications on May 3 and was soon overwhelmed. More than 362,000 businesses applied, seeking $75 billion — nearly three times what Congress had allocated. Little, if any, money would have been left for applicants outside the priority groups. Some restaurant owners sued, claiming that the priority period was discriminatory. Several judges agreed, prompting the agency to alter its approach. In court filings on Friday, the agency said it had — in late May, in response to the legal actions — stopped payment on priority applications. The 2,965 people whose approvals were revoked will be paid only “once it completes processing all previously filed non-priority applications, and only then if the R.R.F. is not first exhausted,” the agency said. Other applicants who expected to be part of the priority queue — tens of thousands of them, according to industry groups — are stalled, waiting to hear if they’ll be approved. About 72,000 of the applicants who have already been paid were covered by the priority process, Patrick Kelley, the head of the agency’s Capital Access office, said on Monday. They received $18 billion of the $27.5 billion that has been handed out.

A pandemic-fueled revival in sales of Gibson guitars may help produce a windfall for KKR & Co., controlling owner of the iconic brand favored by music legends from Eric Clapton to Joan Jett, Bloomberg News reported. Gibson Brands Inc. is marketing a $250 million first-lien term loan that will be used to fund dividend payments and add cash to its balance sheet. KKR took control of the guitar maker during its 2018 bankruptcy process as one of Gibson’s biggest lenders, holding $198 million of the company’s notes at the time. About $225 million of the loan sale will fund the dividend, according to Moody’s Investors Service, which assigned a B2 rating to the company, five levels below investment-grade. KKR led a rescue of Gibson almost three years ago, when guitar enthusiasts at the private equity company helped the manufacturer exit bankruptcy. Sales at the 127-year-old instrument maker took off last year, as COVID-19 lockdowns spurred people to seek new hobbies like guitar playing. Gibson’s order book and sales backlog are now the largest in the company’s history.

Washington Prime Group Inc., a real estate investment trust that operates enclosed malls and strip centers across the U.S., filed for bankruptcy after the COVID-19 pandemic curtailed in-person shopping, Bloomberg News reported. The chapter 11 filing in Houston will allow Washington Prime to continue operating while it seeks to implement a restructuring agreement that it reached with certain creditors, according to a board resolution filed with the bankruptcy petition. The company, which estimated its assets at about $4 billion and debt of almost $3.5 billion, secured an up to $100 million debtor-in-possession loan that would help fund operations during court proceedings. The Columbus, Ohio-based firm that operates around 100 malls, saw its bonds tumble into distressed territory in 2020 as rent collections dried up and tenants filed for bankruptcy or went out of business. It began negotiating with its creditors last year and skipped a $23 million bond interest payment in February. Creditors had been extending a forbearance agreement amid the talks.

Being on the brink of bankruptcy no longer seems to matter much in the U.S. stock market. While that might sound like the beginning of a cautionary tale about the state of investing in 2021, the reality is far stranger, according to a Bloomberg commentary. Redditors have bid up shares of AMC Entertainment Holdings Inc. and GameStop Corp. so much that it’s saved them — for now, at least — from deep trouble. They’re not the only troubled companies where social-media users are trying to conjure magic. In a broad benchmark of U.S. stocks known as the Russell 3000 Index, there are 726 companies whose earnings don’t cover their interest payments, a red flag to pros, according to data compiled by Bloomberg. These zombies are up an average of 30% in 2021 — trouncing the 13% return for the whole index — and 41 of them have doubled since New Year’s Eve. Even explicitly dire warnings don’t seem to register. A bankruptcy plan under consideration by GTT Communications Inc. would wipe out shareholders, which is typical in chapter 11 cases, Bloomberg reported May 24. Nevertheless, the company’s stock is up about 69% since then. Wall Street is starting to factor in the impact of traders drumming up enthusiasm for stocks on social media and Reddit threads. Theater operator AMC, which was on the brink of bankruptcy last year, now has a “path to a sustainable capital structure,” according to S&P Global Ratings, in part because it’s been able to sell new shares amid huge demand from retail investors. Video-game retailer GameStop is now debt-free for the same reason.

Hertz Global Holdings Inc. shareholders have officially notched an improbable win. If not for U.S. regulators, the victory could have been twice as sweet, Bloomberg News reported. All told, Hertz’s bankruptcy exit plan will repay creditors and return more than $1 billion of value to shareholders, lawyer Tom Lauria said on behalf of the company in a Thursday court hearing. But the deal might have delivered more than twice that if Hertz had succeeded in issuing stock to fund its bankruptcy last year, Lauria said. Hertz was an early favorite of traders on Reddit’s WallStreetBets forum, and the ensuing rally prompted the bankrupt firm to explore selling potentially “worthless” shares to raise cash. Hertz scrapped those efforts after Securities and Exchange Commission officials questioned the unusual approach. Instead, Hertz had to borrow more money to fund operations, ultimately arranging a $1.65 billion debtor-in-possession loan from the likes of Apollo Global Management. Because all creditors have to be repaid before equity can get anything in U.S. bankruptcy, the additional debt weighed on recoveries for stockholders. Still, Hertz’s bankruptcy plan is “a fantastic result,” U.S. Bankruptcy Judge Mary Walrath said in hearing Thursday, noting that payouts to equity are virtually unheard of in chapter 11. The case “surpasses any result that I’ve seen in any chapter 11 case that I’ve faced in my 20-plus years,” Judge Walrath said. Read more.

In related news, Hertz Global Holdings Inc. is concluding a chapter 11 case that generated big gains for shareholders, who are usually an afterthought in corporate bankruptcies, WSJ Pro Bankruptcy reported. Bullish individual investors, in particular, were drawn to Hertz and were rewarded for the risk they took on a bankrupt stock. But many of Hertz’s backers are unfamiliar with the bankruptcy process and with their options to get paid under the company’s exit plan, which was approved by a judge Thursday. WSJ Pro Bankruptcy breaks down the choices facing Hertz shareholders, who have a Friday deadline for some parts of the payout. Read more.

A bipartisan group of lawmakers is calling on Congress to provide an additional $60 billion in aid to restaurants and bars after the initial relief fund sparked by the COVID-19 pandemic ran dry, The Hill reported. Sens. Kyrsten Sinema (D-Ariz.) and Roger Wicker (R-Miss.) introduced a bill Thursday that would provide an additional $60 billion to the $28.6 billion in restaurant relief funds included in the American Rescue Plan that President Biden signed in March. “Our restaurants are now beginning to recover from a year of lost revenue, but many establishments are still hurting and have not been able to access aid for which they are eligible,” Wicker said in a statement. “Replenishing this fund would help restaurants, their staff, and the broader food supply chain as they continue to get back on their feet.” Reps. Brain Fitzpatrick (R-Pa.) and Earl Blumenauer (D-Ore.) are leading the effort on the House side. Lawmakers said that restaurants need more support to survive the pandemic, which has caused more than 90,000 establishments to close their doors, according to the National Restaurant Association.

Jewelry maker Alex and Ani LLC, which operates dozens of stores, filed for chapter 11 protection yesterday, Bloomberg News reported. The Rhode Island-based jewelery company sells wares like charm bracelets and necklaces and was founded in 2004 by Carolyn Rafaelian. It opened its first store in the state in 2009 and has since expanded locations spanning the United States, Aruba and Panama. Alex and Ani’s filing in Delaware listed assets and liabilities of $100 million to $500 million each. Mall owners Simon Property Group Inc. and Brookfield Property Partners LP are among its largest unsecured creditors; each are owed more than $3 million in rent payments. The filing comes nearly two years after the firm sued Bank of America Corp. for more than $1 billion, in a lawsuit which accused the bank of fraudulently declaring Alex and Ani in default of a $50 million line of credit and of driving it toward bankruptcy. The bank said it strongly disagreed with the allegations at the time. That case was later dropped in August 2019.

Individual stock traders looking to cash in winning bets on Hertz Global Holdings Inc. are in unfamiliar territory as the company exits chapter 11, finding themselves navigating a bankruptcy process that favors the interests of bigger, wealthier investors, WSJ Pro Bankruptcy reported. All Hertz shareholders will get paid on the company’s way out of chapter 11, receiving a mix of cash, securities in the reorganized business and the right to buy stock in the future. By Friday, they must pick among several choices involving the rights to buy additional stock, with their options determined by eligibility standards tied to personal wealth. Shareholders weighing the various decisions include the day traders who bought Hertz stock when it was cheap last year, at the height of the coronavirus pandemic. Some are mom-and-pop investors who don’t meet criteria to take part directly in one of the stock-buying programs, though they could sell their rights to participate to qualified investors. Other investors have trouble understanding their options and said they can’t get straight answers from the company or from their own advisers. Some said they felt left behind in a bankruptcy-exit process that wasn’t developed with amateur investors in mind. Hertz’s situation is unusual due to the dramatic revival in its prospects in recent months. Shareholders rarely matter when a company goes bankrupt, because there is typically not enough value to repay creditors, which must be satisfied in full ahead of equity. Hertz, though, has estimated shareholders will get a payout of $7 to $8 a share, according to court papers.