Authentic Brands Group LLC is in discussions to join a planned rescue of J.C. Penney Co., Business Insider reported, citing two people familiar with the matter. Mall landlords Simon Property Group Inc. and Brookfield Property Partners LP agreed to buy the bankrupt department store in a deal valued at $1.75 billion. The people didn’t disclose whether Authentic Brands would invest in the department store alongside Simon and Brookfield or buy into the partnership after the restructuring was done in the coming weeks, Business Insider said. New York City-based Authentic Brands, which owns a collection of consumer brands including Nautica and Aeropostale, teamed up with Simon and Brookfield to buy teen clothing chain Forever 21 out of bankruptcy earlier this year.
Century 21, where generations of New Yorkers shopped for deep discounts on everything from Prada handbags to Jerry Garcia ties, filed for bankruptcy, the latest retailer to fall victim to disruptions caused by the coronavirus pandemic, WSJ Pro Bankruptcy reported. Century 21 Department Stores LLC said yesterday that it is closing all 13 of its department stores and that it plans to liquidate its assets under chapter 11 protection in U.S. Bankruptcy Court in New York. In recent years, Century 21 expanded beyond its roots in New York City to open stores in New Jersey, Pennsylvania and Florida. Going-out-of-business sales are set to start soon. The company blamed the bankruptcy filing on its insurance providers’ decision to not pay about $175 million that the retailer says it is owned amid the coronavirus pandemic and under policies to protect against business disruptions. Insurers that have received coronavirus-related claims have argued that most policies have exceptions for viruses, and courts have generally agreed.
J.C. Penney Co. sales plunged 45 percent in the second quarter as the department-store chain entered bankruptcy and struggled with an accelerated shift away from physical stores and the COVID-19 outbreak, Bloomberg News reported. Net sales fell to $1.39 billion in the period ended Aug. 1 from $2.51 billion a year earlier, the company reported yesterday in a regulatory filing. The retailer’s lenders have agreed to team up with landlords Simon Property Group Inc. and Brookfield Property Partners to buy the troubled company, which has struggled for years with changing consumer tastes and falling traffic at malls. The outbreak of the pandemic accelerated this trend and prompted its chapter 11 filing in May. The company reported $64 million in advisory fees and $50 million in debtor-in-possession financing fees. Including gains related to the termination of leases, reorganization costs totaled $108 million in the second quarter.
The owner of New York Sports Clubs is planning to file for bankruptcy as soon as today after talks for financing that would have helped the chain weather the COVID-19 pandemic fell through, Bloomberg News reported. Town Sports International Inc. had been negotiating a potential $80 million capital injection from Kennedy Lewis Investment Management. The investment firm backed away after Town Sports realized it would need more money and asked for $200 million. The gym owner has been in talks with lenders as it seeks to refinance a loan coming due in November. Negotiations are ongoing, but lenders have been reluctant to put in new money or extend the debt. Kennedy Lewis bought a large chunk of the company’s borrowings when they were trading at a steep discount. Town Sports is in discussions with other third parties who could support the company through its restructuring process.
Mall owners Simon Property Group Inc. and Brookfield Property Partners LP agreed to acquire J.C. Penney Co. out of bankruptcy for $800 million, keeping the beleaguered department-store chain alive amid the coronavirus pandemic, WSJ Pro Bankruptcy reported. Simon and Brookfield, J.C. Penney’s landlords, have reached an agreement in principle to buy the chain, which filed for chapter 11 in May after the pandemic shut down nonessential shopping across the country. If approved in bankruptcy court, the deal will prevent the closure of hundreds of locations across malls and shopping centers that face rising vacancies due to COVID-19 restrictions. A group of lenders including H/2 Capital Partners LLC, Sculptor Capital Management Inc., Brigade Capital Management LP and Sixth Street Partners have signed on, betting that J.C. Penney can make money selling clothing, cosmetics and cookware despite the stark challenges facing American retail. The landlords will own about 490 of J.C. Penney’s remaining 650 stores outright, a person familiar with the matter said. They will lease 160 other stores plus distribution centers from the lenders, which will own those assets in return for forgiving some of J.C. Penney’s $5 billion in debt. The company had about 850 locations at the time of its bankruptcy filing and has closed some for good.
The Canadian owner of 322 Garage and Dynamite women’s clothing and accessories stores has filed for bankruptcy in the U.S. and plans to close some of its locations after struggling with fallout from the coronavirus pandemic, the Wall Street Journal reported. Montreal-based Groupe Dynamite Inc. filed its chapter 15 petition on Tuesday in response to “the refusal of certain landlords to negotiate and agree on a Covid-19-adjusted rental model,” Andrew Lutfy, executive chairman, said in a sworn declaration filed with the U.S. Bankruptcy Court in Wilmington, Del. The company, which is undertaking similar legal proceedings in Canada, said that it expects its business to continue to suffer until a vaccine is available. One of the goals of the retailer’s restructuring is to free itself from a minority of its leases that are deeply unprofitable, Lutfy said. But the business also wants to renegotiate leases of other unprofitable stores, and, if those talks fail, those locations could close as well, he said. Groupe Dynamite has been able to renegotiate 22 of its 322 leases, Lutfy said. Read more. (Subscription required.)
It has been a prolonged period of retail carnage: Storied names declaring bankruptcy, mass-market brands closing thousands of stores, tens of thousands of shop employees furloughed or laid off, garment workers in dire straits. For Jamie Salter and David Simon, however, it has been a time of great opportunity, the New York Times reported. Salter is the founder and chief executive of the Authentic Brands Group, a company known for buying the intellectual property of famous brands at discount prices and then striking licensing deals with other companies that want to stick those well-known names on their products. Simon is the chief executive of the Simon Property Group, the largest mall operator in the U.S. with more than 100 properties including Twin Cities Premium Outlets in Eagan, Albertville Premium Outlets in Albertville, Southdale Center in Edina and Miller Hill Mall in Duluth. Together, they are reshaping the American retail landscape. Last week, they closed a deal to buy the bankrupt Brooks Brothers, the 202-year-old American fashion brand and retailer, for $325 million. Last month, they acquired Lucky Brand denim, and in February, they bought Forever 21. Together, the acquisitions will bring the global revenue generated by the company’s brands — a sprawling mix that includes Sports Illustrated and rights tied to Marilyn Monroe’s likeness — to $15 billion annually. And Salter is hunting for more. Many of the acquisitions are being made through a joint venture with Simon called SPARC, for Simon Properties Authentic Retail Concepts. Its roots go back to 2016, but it was created in its present form in January as a vehicle that turned out to be almost perfectly positioned to take advantage of the current state of the industry.
Neiman Marcus Group said on Friday that it expected to emerge from chapter 11 bankruptcy by the end of this month under a restructuring plan that is likely to eliminate more than $4 billion of its debt, Reuters reported. The luxury department store chain filed for bankruptcy protection in May, in one of the highest-profile retail collapses during the COVID-19 pandemic. The 113-year old company said certain institutional investors will fund a $750 million exit financing package that would fully refinance its debtor-in-possession loan and provide additional liquidity for its business. The U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, approved Neiman Marcus’ reorganization plan.
The nation’s bricks-and-mortar retailers were undergoing a reckoning years before the pandemic led to shutdowns and a tanking economy, tipping more than a dozen major retailers into bankruptcy and prompting many others to thin their ranks. The result: Thousands of liquidation sales, at a time when many Americans are wary of in-store shopping or spending, the Washington Post reported. Firms that specialize in winding down stores say liquidating now is markedly different from what it was before the pandemic. Companies are offering deeper discounts to win over consumers — with sales starting at 40 percent off instead of the usual 20 percent — as well as other incentives. Even then, results can be spotty: Proceeds from liquidation sales have fallen about 25 percent since the novel coronavirus took hold, according to Jim Schaye, chief executive of retail liquidation firm Eaton Hudson.
As insurers brace for an expensive natural-disaster season because of storms and wildfires ravaging parts of the United States, the novel coronavirus is giving them an odd financial break, Reuters reported. Many companies that were damaged or evacuated because of natural catastrophes were already generating far less revenue due to the pandemic. That means they will get lower payouts upon filing business-interruption claims, according to analysts, lawyers and industry sources. It is another hit for small businesses that rebuilt after major disasters in recent years, only to see revenue screech to a halt during the pandemic, and then enter another aggressive disaster season. It could leave some companies unable to survive, said John Ellison, an attorney at Reed Smith LLP who has represented policyholders in cases stemming from hurricanes Katrina, Rita and Sandy. “There is a reasonable chance that any business in that situation is not going to make it,” he said.
