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A Brooks Brothers part-owner that lost $100 million when the menswear retailer went bankrupt last year sued its former controlling Del Vecchio family for allegedly ignoring potential deals that could have warded off chapter 11, WSJ Pro Bankruptcy reported. Hong Kong-based TAL Apparel Ltd. said in court papers that the troubled company had interested suitors in 2019 but the Del Vecchio family turned its back on those opportunities, choosing to gamble on bankruptcy instead. Brooks Brothers filed for chapter 11 in 2020, joining a herd of pandemic-battered apparel retailers. The company was sold out of bankruptcy for $325 million to Authentic Brands Group LLC and mall operator Simon Property Group Inc. TAL, a former minority shareholder, said the 2019 offers were rejected because, although they were rich enough to keep Brooks Brothers out of bankruptcy, they weren’t enough to protect the Del Vecchio family from having to pay out on a make-whole agreement with TAL. In 2016, when TAL agreed to invest $100 million for a minority stake in Brooks Brothers, the deal came with a guarantee backed by the Del Vecchios, according to the complaint. Under the agreement, if Brooks Brothers was sold for less than $652 million — the valuation assigned to the company when TAL bought its stake — the family would make good on TAL’s losses, the lawsuit said. The potential offers that arrived in 2019 were at prices that would have forced the Del Vecchios to come up with money of their own to cover TAL’s losses, according to the complaint, which said the family “threatened that instead of pursuing the bids on the table, they would ‘roll the dice’ and sell Brooks Brothers as part of bankruptcy proceedings.” Bankruptcy or no bankruptcy, TAL is seeking a court order compelling Claudio Del Vecchio, his son Matteo and affiliated entities to make good on TAL’s losses.

When shares of Hertz Global Holdings Inc. soared after the company filed for bankruptcy a year ago, finance professionals reacted with a mix of confusion and scorn. A year later, small investors who bet on the company in its distress are getting the last laugh, WSJ Pro Bankruptcy reported. The century-old rental-car giant is poised to mint big gains for loyalists on its way out of bankruptcy. It’s a result that seemed unfathomable when its business unraveled early in the COVID-19 pandemic and another marker of an upside-down year in markets. On May 14, a bankruptcy court approved a winning auction bid that will hand control of Hertz to institutional investors who won a heated competition to buy the company out of bankruptcy as its prospects brightened. Hertz expects stockholders to receive more than $7 a share of value out of the deal, and perhaps as much as $8 a share, as the company emerges from chapter 11. Hertz closed at $5.76 on Tuesday in the over-the-counter market. The New York Stock Exchange delisted the shares in October after determining they were no longer suitable, since the company was in bankruptcy. Driven by individuals trading on apps, Reddit message-board boosters and the boredom of lockdown, financial markets have been on occasion hard to explain this year, including the GameStop Corp. mania, a joke cryptocurrency and a $100 million deli. It’s not surprising that standard bankruptcy practice should also get turned around. Hertz shareholders avoided being wiped out as the company’s prospects recovered to match the bullish outlooks of online traders who piled into the company in June after it filed for bankruptcy protection. Whether or not they were acting irrationally, their view of Hertz ended up closer to reality than the supposed smart money that dumped the stock.

Retails sales in April remained virtually unchanged from March, according to census data released Friday, a significant drop off following the major 10.7 percent surge the previous month, The Hill reported. The figures fell short of the 1 percent rise economists had expected. Retail sales came in at $619.9 billion, slightly higher than March. The March growth in retail sales was fueled by $1,400 stimulus checks, though additional payments have continued to trickle out in April and May. Despite the unexpected stall in growth, the overall figures remained positive, according to Matthew Shay, CEO of the National Retail Federation. The latest figures are significantly higher than pre-pandemic levels, which reached $525.8 billion in February of last year, before the pandemic shuttered the economy.

Washington Prime Group Inc.’s creditors are having difficulty advancing discussions over a planned chapter 11 filing as groups tussle over dividing the mall owner’s assets, Bloomberg News reported. The slow talks have sparked several deadline extensions -- the latest announced on Wednesday -- with sticking points, including creditors’ rights to assets that aren’t already being used as collateral for Washington Prime’s debt. The company on Monday reported a $55 million loss for the three months through March 31. At issue is the division of new equity, debt and cash each lender group would receive from the bankruptcy plan. Given the diminishing appeal of owning a mall chain, the parties are all pushing to minimize their equity exposure and maximize their take of new debt, they added. After the latest extension, Washington Prime’s forbearance agreements with lenders are set to expire May 19.

A sprawling shopping mall in Syracuse, New York, may be driven into one of the biggest municipal-bond defaults since the onset of the pandemic, Bloomberg News reported. Already struggling before the lockdowns hammered retailers, Destiny USA, the state’s largest mall, said it doesn’t know if it will generate enough cash to keep running and pay its debts this year, raising doubts about whether it can continue as a business. Its owner, Pyramid Management Group, hired restructuring advisers and has sought a meeting with investors who hold about $285 million of municipal bonds that financed the project, according to a filing last month. Nuveen LLC and MFS Investment Management were the biggest holders of the debt as of March 31, according to data compiled by Bloomberg. If Destiny can’t pay what it owes, it would be the second-largest default in the state and local government bond market since Covid-19 began racing through the nation in early 2020. It would also mark the first ever on debt backed by payments developers agreed to make instead of property taxes, making it a potential precedent for a $7.5 billion corner of the market that financed New York’s Hudson Yards development, the Mets’ baseball stadium and the new American Dream mall in New Jersey, whose grand opening was delayed by the pandemic.

Elliott Investment Management, the owner of Barnes & Noble, said on Tuesday that it will acquire gift and stationery retailer Paper Source, CNBC.com reported. The acquisition will provide Paper Source with the funding it needs to emerge from chapter 11 bankruptcy. Barnes & Noble CEO James Daunt will oversee both companies. While the two businesses plan to operate independently, it hinted at possible partnerships in the future. Paper Source plans to operate 130 stores in the U.S. as well as its website and wholesale division, Waste Not Paper by Paper Source. The stationery chain filed for bankruptcy on March 2 and was forced to close stores, cut jobs and reduce the pay of senior managers. Like many retailers, Paper Source’s sales fell last year after Covid pandemic shutdowns, capacity restrictions, and a wave of canceled weddings and events hurt sales of invitations. Paper Source had purchased 30 new stores from its competitor Papyrus just weeks before the pandemic hit in March 2020. At the time of its bankruptcy filing, Paper Source had 1,700 employees, 158 stores, and $100 million in debt and leases that cost $36 million annually.

Lawmakers have unleashed more than $5 trillion in relief aid over the past year to help businesses and individuals through the pandemic downturn. But the scale of that effort is placing serious strain on a patchwork oversight network created to ferret out waste and fraud, the New York Times reported. The Biden administration has taken steps to improve accountability and oversight safeguards spurned by the Trump administration, including more detailed and frequent reporting requirements for those receiving funds. But policing the money has been complicated by long-running turf battles; the lack of a centralized, fully functional system to track how funds are being spent; and the speed with which the government has tried to disburse aid. The scope of oversight is vast, with the Biden administration policing the tail end of the relief money disbursed by the Trump administration last year in addition to the $1.9 trillion rescue package that Democrats approved in March. Much of that money is beginning to flow out the door, including $21.6 billion in rental assistance funds, $350 billion to state and local governments, $29 billion for restaurants and a $16 billion grant fund for live-event businesses like theaters and music clubs. The funds are supposed to be tracked by a hodgepodge of overseers, including congressional panels, inspectors general and the White House budget office. But the system has been plagued by disagreements and, until recently, disarray.

Lenders to Revlon Inc. that received roughly $500 million from Citigroup Inc. last year due to a back-office blunder are allowed to use the money as they see fit, a federal judge ruled yesterday, unfreezing the funds, WSJ Pro Bankruptcy reported. Judge Jesse Furman of the U.S. District Court in Manhattan on Wednesday denied Citi’s request to continue to freeze the funds while the bank tries to persuade an appellate court it deserves the money back. The judge had frozen the funds in August while he considered the case. Citi wanted the freeze to be maintained, saying it feared that even if it won on appeal, it might have difficulty recovering the money once the asset managers distributed it to their clients. The dispute stems from a mistake in August in which Citi paid off—with its own money—a nearly $900 million loan balance owed by Revlon, when only an interest payment was due. When Citi asked for the money back, some of the recipients obliged, returning roughly $385 million. Others—including Brigade Capital Management LLC, Symphony Asset Management LLC and HPS Investment Partners LLC—declined to return more than $500 million, touching off a legal dispute with the bank. Citi is appealing the judge’s February ruling that the lenders could keep the funds they were wired by the bank, the loan agent in charge of collecting and distributing interest payments from Revlon. As the appeal continues, the bank had sought to prohibit the lenders from using the money as they wished.

Mall owner Simon Property Group Inc. increased its full-year earnings guidance as retail sales and shopper traffic pick up across the U.S., Bloomberg News reported. “Our business has substantially improved after addressing the impacts from the COVID-19 pandemic,” Chief Executive Officer David Simon said in the company’s first-quarter earnings statement yesterday. Profitability, cash flow and customer traffic have grown, increasing tenants’ sales. Leasing momentum is also on the rise, he said. The company now sees funds from operations of $9.70 to $9.80 a share for the year, up from its forecast in February of $9.50 to $9.75, according to the statement. Like other retail landlords, Indianapolis-based Simon Property took a hit in the past year as malls shuttered during local lockdowns and consumers shifted more purchases to the internet. Rent collections dropped and many big chains filed for bankruptcy. Simon was also embroiled in a legal battle for months over its agreement to acquire rival mall owner Taubman Centers Inc. just before the pandemic hit. Simon reached a deal in November to purchase Taubman at a lower price. In the past few months, the nation’s retail business has been rebounding as vaccination rates accelerate and cities expand reopening plans. The Taubman portfolio is also seeing signs of growth, Simon said.