%1

Steak ’n Shake Inc. is considering filing for bankruptcy to address upcoming debt maturities as pandemic disruptions to the restaurant business drag on, Bloomberg News reported. Advisers including FTI Consulting Inc. and the law firm Latham & Watkins are prepared to put the Indianapolis-based chain into chapter 11 as soon as next week, said the people, who asked not to be identified discussing confidential plans. The burger chain earlier enlisted advisers to help it manage its debt load, which includes a loan due in March. The potential plans for a bankruptcy could change, and the company has also discussed out-of-court solutions. Steak ’n Shake’s parent company, Biglari Holdings Inc., has said it won’t guarantee the chain’s loan maturing in March, though it acknowledged the company would otherwise struggle to either pay off or refinance the debt. Steak ’n Shake, known for its burgers and milkshakes, was founded in 1934 in Normal, Illinois. The chain has more than 500 locations in 28 states, with concentrations in the Midwest and the South.

Federal prosecutors are investigating whether market manipulation or other types of criminal misconduct fueled the rapid rise last month in prices of stocks such as GameStop Corp. and AMC Entertainment Holdings Inc., the Wall Street Journal reported. The Justice Department’s fraud section and the San Francisco U.S. attorney’s office have sought information about the activity from brokers and social-media companies that were hubs for the trading frenzy, the people said. Prosecutors have subpoenaed information from brokers such as Robinhood Markets Inc., the popular online brokerage that many individual investors used to trade GameStop and other shares, the people said. GameStop shares surged from about $20 to $483 over a period of two weeks in January. The stock has since fallen to around $50. It was fueled by an army of bullish individual traders exhorting one another on Reddit to buy the shares and squeeze hedge funds that bet the price would fall. Traders who bet stock prices will decline are known as short sellers. In addition to the probe by the Justice Department, the Commodity Futures Trading Commission is examining similar trading. The CFTC has opened a preliminary investigation into whether misconduct occurred as traders, including those coordinating on Reddit, targeted silver futures and the largest exchange-traded fund tied to silver, the iShares Silver Trust.

Equinox Holdings Inc. got relief on some of its debts tied to the luxury fitness chain’s SoulCycle subsidiary after agreeing to pay down a portion of the borrowings, Bloomberg News reported. Equinox, backed by billionaire Stephen Ross’s Related Cos., reached a deal that releases it from a limited guarantee of SoulCycle’s $265 million credit facility with lender HPS Investment Partners. As part of the deal, Equinox will also add additional protections to its borrowings. Equinox struck a forbearance deal with HPS last May to delay the payment deadline until Feb. 15. Equinox’s guarantee originally required it to buy back at least part of SoulCycle’s obligations if the spin studios’ debt relative to earnings exceeded certain thresholds. The new agreement releases Equinox Holdings from certain debt requirements, though another unit of the company still guarantees the obligations.

Belk today reaffirmed that it expects to complete its financial restructuring through an expedited "pre-packaged, one-day" reorganization, according to a press release. The company expects to file for chapter 11 on February 24, 2021, and anticipates that the confirmation hearing to approve the restructuring will be held on the same day, at 2:00 p.m. Central Time. Lenders holding 99% of Belk's first lien term loan and 100% of Belk's second lien term loan have now entered into the previously announced Restructuring Support Agreement (the "RSA"), evidencing near unanimous term loan lender support for Belk's "one-day" reorganization. The RSA enables Belk to raise $225 million of new capital, significantly reduce debt by approximately $450 million, and extend maturities on all term loans to July 2025. Belk plans to continue normal operations throughout its financial restructuring. Under the RSA, suppliers will be unimpaired and will continue to be paid in the ordinary course for all goods and services provided to the company. Under the terms of the RSA, Sycamore Partners will retain majority control of Belk. Belk has secured financing commitments for $225 million in new capital from Sycamore Partners, leading global investment firms KKR and Blackstone Credit, and certain existing first lien term lenders. Belk has also secured an extension of the early consent deadline for additional lenders to provide commitments for the $225 million of new capital. The commitment deadline has been extended to 4:00 p.m. Central Time on February 11, 2021, although additional commitments are not required for successful completion of the restructuring. Members of an ad hoc crossover lender group led by KKR Credit and Blackstone Credit and other participating lenders will acquire a minority ownership in Belk.

Simon Property Group Inc. forecast higher full-year profit yesterday as improving store traffic at brick-and-mortar retailers helped drive a rise in the largest U.S. mall owner’s rent collection, Reuters reported. Sales of some brick-and-mortar retailers have improved from the pandemic troughs plumbed last year thanks to the launch of online shopping options such as same-day order pick-ups and government stimulus checks. Simon said it had collected 90% of the second, third and fourth-quarter net billed rents combined as of Feb. 5. It had collected only 85% of third-quarter net billed rents as of Nov. 6. However, total revenue fell 24% to $1.13 billion in the fourth quarter ended Dec. 31. Simon forecast 2021 earnings per share of $4.60 to $4.85, compared with a profit of $3.59 per share in 2020.

Fewer promotions helped the makers of Coach handbags, Versace dresses and Ralph Lauren polos boost profitability in the holiday quarter, even as online gains were unable to make up for pandemic-driven sales declines, the Wall Street Journal reported. Faced with reduced demand as rising COVID-19 outbreaks forced shoppers to continue sequestering at home, many brands scaled back inventory, which helped them avoid the deep discounting of past holiday seasons. At Tapestry Inc., which owns the Coach and Kate Spade brands, net income rose 4% to $311 million in the three months to Dec. 26 driven by reduced promotions and higher average prices. While year-over-year profit declined at Ralph Lauren Corp. 2.51%, the average price of items sold in the period rose 19%—the third consecutive quarter of gains. Kohl’s Corp. , which is scheduled to report results in March, said yesterday that it reached better-than-expected earnings for the holiday quarter, reflecting less inventory and fewer promotions, even as revenue fell about 10%. And some retail chains are predicting that sales will snap back this year. Nordstrom Inc. said yesterday that it expects sales to rise about 25% in the fiscal year that started this month. For the recently completed holiday quarter, sales fell about 20%, the company said.

CBL & Associates Properties Inc. yesterday urged a bankruptcy judge to reject senior lenders' efforts to assert control over the mall operators' assets and operations, saying that its ability to reorganize in chapter 11 is at stake, Reuters reported. The statements from CBL attorney, Ray Schrock of Weil Gotshal & Manges, came during opening arguments in a virtual trial before Chief U.S. Bankruptcy Judge David Jones in Houston over lender claims that a series of alleged defaults on the loan documents gave them the right to take over certain subsidiaries and collect revenues directly from tenants. Wells Fargo & Co., which heads up the lender group and is represented by Jones Day, claims that CBL did not have the authority to file for bankruptcy and is looking to have the case thrown out. The case is now a showdown between the lenders and the company, which said it was forced to seek bankruptcy to protect itself and its assets from Wells Fargo. Chattanooga-based CBL filed for chapter 11 protection in November following months of COVID-19-related economic turmoil for its retail tenants and Wells Fargo's allegations of default on a $1.1 billion loan. The company, which was one of the first major mall operators to seek bankruptcy since the onslaught of the pandemic, reported $4 billion in debt and a restructuring support agreement with holders of its $1.4 billion in unsecured notes. Under the noteholder-backed restructuring agreement, CBL would reduce its debt load and preferred obligations by $1.5 billion.

Vegan celebrity chef Chloe Coscarelli is fighting the bankrupt parent company of plant-based restaurant chain By Chloe over the brand’s trademark, WSJ Pro Bankruptcy reported. Coscarelli and her company, Chef Chloe LLC, agreed to a court hearing later this month so that a bankruptcy judge could determine the ownership of the trademark of By Chloe, the fast-casual chain she co-founded but left behind after a dispute. Representatives for By Chloe’s owner BC Hospitality Group Inc. argued during a virtual hearing Wednesday that Ms. Coscarelli is trying to take away the company’s rights over the trademark, one of the most valuable assets of the estate. The company has said in court papers that Coscarelli’s request could derail the chain’s sale process and wreak havoc on the ability of its bankruptcy case to move forward. BC Hospitality Group filed for chapter 11 bankruptcy protection in December to ease a sale of the restaurant business, which has about a dozen corporate-owned locations, after it faced a cash crunch brought on by the coronavirus pandemic. The company, partially owned by investment firm Bain Capital LP, has scheduled an auction for the chain on March 1, if necessary. Both sides want the issue to be resolved in advance of a hearing on March 4 for the judge to consider approving a winning bidder and to confirm BC Hospitality Group’s proposed bankruptcy plan.

Mudrick Capital Management LP, the hedge fund that provided a much-needed lifeline to AMC Entertainment Holdings Inc. in December, is sitting on hundreds of millions of dollars in gains following last week’s rally in the price of AMC’s shares, WSJ Pro Bankruptcy reported. The New York-based firm made $200 million in profit, mostly from its holdings in AMC debt. Mudrick’s gains derive from a combination of paper gains and realized trades. Last week, AMC shares nearly tripled in value as the cinema chain’s stock caught the attention of individual investors swarming popular Reddit forums who were looking to repeat the dizzying rally seen in shares of GameStop Corp. Most of Mudrick Capital’s gains, however, are from its holdings in the company’s bonds, which rallied as the company’s share price increased. The firm also made about $50 million writing call options last week in the midst of the buying frenzy. The call options will enable holders to buy shares from Mudrick at a predetermined price. When Mudrick provided AMC with the new loan, the firm also received AMC shares as part of its commitment fee, as well as part of a swap of some of the firm’s holdings in junior AMC bonds. In that transaction, Mudrick swapped $100 million in AMC debt for shares.

A little over a year after a reconstituted Toys ‘R’ Us opened two brick-and-mortar stores to much fanfare, the toy seller is now permanently closing the stores, according to multiple media reports, Retail Dive reported. The stores, opened in the fall of 2019, were a joint venture between Tru Kids, owner of the Toys ‘R’ Us intellectual property, and b8ta. Tru Kids did not immediately respond to a request for comment. When Toys ‘R’ Us was liquidating its stores and putting its remaining assets up for sale, some speculated that its intellectual property might be among the most valuable ever sold in a chapter 11 auction. The speculation stemmed from the millions of adults who shopped in its stores when they were younger and associated the brand with all the greedy joys of toy acquisition to a child. The auction never happened. The toy retailer's lenders — who pulled the plug on the toy store chain and sent it into wind down-mode after it fell short of performance projections in the 2017 holiday season — opted to take ownership of the property instead through what became Tru Kids, which also runs international Toys ‘R’ Us operations. Headed by Richard Barry, the old Toys ‘R’ Us' chief merchant, Tru Kids partnered with b8ta to open its first two stores under the Toys ‘R’ Us banner. The stores weren't exactly stores in the traditional sense of buying inventory from suppliers and selling it for a profit. They were more a kind of marketing platform and showroom for toymakers, which paid Toys ‘R’ Us fees to put their products in the location. The store closures come at a time when the toy category broadly has gotten a big bump in the COVID-19 era, with parents seeking ways to entertain children stuck at home. From their closures, it seems traffic declines at the store were severe enough to lower their value as showrooms in the eyes of suppliers.