Clark Appliance, a high-end home appliance retailer in business for more than 100 years, filed an emergency voluntary petition for chapter 11 relief on Friday, the Indianapolis Star reported yesterday. In a letter to customers, owner Bob Clark said that the move was motivated by a number of financial problems that have plagued the company since 2008. Court documents state that Clark Appliance owes about $2.2 million to its largest single creditor, General Electric. First Business Capital Corp., an asset-based lender in Madison, Wis., is owed about $2 million.
L’Oreal SA, the world’s largest cosmetics maker, announced on Oct. 20 that it has an agreement to acquire recently reorganized beauty brand Carol’s Daughter through a U.S. unit, Bloomberg News reported yesterday. Carol’s Daughter will continue to operate from its New York headquarters under its current leadership team, according to the L’Oreal statement. CD Stores LLC got bankruptcy court approval of its chapter 11 plan on Sept. 2. In bankruptcy, the company consolidated retail operations into two stores in Harlem and Brooklyn, New York. A 10 percent distribution was paid to creditors under the plan, according to a Sept. 15 closing report.
This summer’s huge cyberattack on JPMorgan Chase and a dozen other financial institutions is accelerating efforts by federal and state authorities to push banks and brokerage firms to close some gaping holes in their defenses, the New York Times reported today. Top officials at the Treasury Department are discussing the need to bolster fortifications around a critical area of cybersecurity: outside vendors, which include law firms, accounting and marketing firms and even janitorial companies. The sweeping effort began before the hacking of JPMorgan, which compromised some of the personal account information of 76 million households and 7 million small businesses. Under discussion is a requirement that the banks put in place more stringent procedures and safeguards to make sure that outside firms have, at the least, basic defenses. http://dealbook.nytimes.com/2014/10/21/after-jpmorgan-cyberattack-a-pus…
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In related news, Staples Inc., the world’s largest office-supply chain, is investigating a potential breach of customer credit card data, becoming the latest retailer to confront a threat from hackers in recent months, Bloomberg News reported today. Staples has contacted law enforcement authorities and is working to resolve the matter, according to Mark Cautela, a spokesman for the Framingham, Mass.-based company. The potential data theft adds to a wave of breaches at companies such as Home Depot Inc., Target Corp., Sears Holdings Corp.’s Kmart chain and Neiman Marcus Group Ltd. that have put pressure on retailers to bolster security. The Staples incident, reported earlier by independent journalist Brian Krebs, may involve the theft of card information from Staples locations in the Northeast. http://www.bloomberg.com/news/print/2014-10-21/staples-says-it-s-probin…
Sears Holdings Corp., the struggling one-time U.S. retail stalwart, unveiled two new measures today in a bid to raise cash, one of which again taps into the hedge fund of its billionaire chief executive, the Wall Street Journal reported today. The company said that it would lease seven locations to European fashion retailer Primark, while it also unveiled an offering of debt rights and warrants that could generate as much as $625 million and help fund operations during the holiday-shopping season. Sears said that the hedge fund, run by CEO Edward Lampert, has said that it intends to exercise its portion of the subscription rights in the offering in full, which would result in at least $303 million.
Alco Stores Inc., a 198-store retailer largely serving small towns in 23 states, can finance the reorganization it began last week in Dallas with an interim loan capped at $50 million and letters of credit from pre-bankruptcy secured lenders led by Wells Fargo Bank NA, Bloomberg News reported yesterday. A bankruptcy judge on Friday signed an interim order approving the loan and allowing the company to use cash representing collateral for secured lenders’ claims. Alco filed for chapter 11 protection on Oct. 12 with a commitment from the lenders to provide senior secured financing consisting of a $110 million revolving credit and a term loan of about $12.7 million. In addition to funding the chapter 11 effort, the loans will be used to repay pre-bankruptcy debt. A hearing to approve the financing package on a final basis is scheduled for Nov. 12.
Alco Stores Inc. filed for chapter 11 protection yesterday with plans to liquidate or sell the 113-year-old retail operation, the Wall Street Journal reported today. The filing came not long after the board of directors was replaced as the result of a proxy fight that saw shareholders clamoring for improved results at Alco, which operates 198 discount general merchandise stores in 23 states. In court papers, Alco blamed the effects of the “lingering economic slowdown” on its customers, many of whom are living on fixed or low incomes in rural areas. While it has positioned its stores to avoid head-to-head competition with larger discount chains, Alco said it couldn’t escape the effects of economic distress in the U.S. The bankruptcy filing puts about 3,000 jobs on the line, most of them in stores in areas of Texas, Kansas, Colorado and other states, located in small communities and sparsely populated regions. Alco has lined up a stalking-horse liquidation bid from a joint venture made up of Tiger Capital Group, LLC, SB Capital Group, LLC, and Great American Group WF, LLC, court papers say.
RadioShack Corp., the electronics chain trying to stave off bankruptcy, reached an agreement with a consortium led by Standard General LP to refinance about $590 million of loans to re-stock ahead of the holidays, Bloomberg News reported today. Standard General, a New York-based hedge fund, will lead a group of lenders to refinance debt outstanding under a $535 million asset-backed revolving credit line from GE Capital, the lending arm of General Electric Co. Last month, Standard General said in a filing it’s working to improve RadioShack’s liquidity ahead of the holiday season. The fund, RadioShack’s largest investor, entered into an agreement lasting until June 2015 that prevents it from taking over the board or proposing an acquisition or restructuring without RadioShack’s consent.
As Crumbs Bake Shop Inc. began its final descent into bankruptcy late last year, the cupcake maker’s newly appointed chief executive, Ed Slezak, implemented a new strategy to help boost the company’s revenue: Sell Crumbs-branded products at everyday stores like Target and BJ’s Wholesale Club, the Wall Street Journal reported today. Crumbs collaborated with companies to create mass-market cupcakes and bake-at-home Crumbs mixes, but the new ventures had only been rolling a few months when Crumbs abruptly closed all its stores and sought Chapter 11 protection in July. Now, with the majority of Crumbs’ assets sold to a partnership between CNBC reality show host Marcus Lemonis and Dippin’ Dots owner Fischer Enterprises that plans to relaunch Crumbs stores, the companies that struck those licensing agreements questioned how to go forward during the bankruptcy proceeding. A bankruptcy judge in New Jersey considered that question yesterday in response to an urgent request from Houston-based Coastal Foods Baking, a commercial bakery that said the Lemonis-Fischer group sent it a cease-and-desist letter Sept. 23 to prevent it from fulfilling new orders for Crumbs-branded baked goods. With hundreds of cupcakes already in the process of being made at the time the letter came, Coastal Foods President and Chief Executive William Evans said in a court filing that it will “have to destroy the food product” and eat $45,850 in costs if Lemonis-Fischer doesn’t back down. Bankruptcy Judge Michael Kaplan told Coastal Foods during a contentious hearing yesterday that it could fill the two new cupcake orders, though any further production must wait until the parties determine whether Coastal Foods still has any rights under the licensing agreement and whether the licensing agreements were included in the bankruptcy sale.
RadioShack Corp. has tried — unsuccessfully so far — to convince a major supplier to alter its terms as the struggling electronics retailer works to avoid a bankruptcy filing, the Wall Street Journal reported today. The company, which disclosed the effort in a securities filing yesterday, didn't name the vendor or spell out the issues under discussion. But it has been in talks with wireless carriers including AT&T Inc. and Sprint Corp. to ease the terms under which they provide equipment that RadioShack resells. The talks with the supplier haven't borne fruit but are continuing, the company said in the filing. RadioShack warned earlier this month that it was quickly running low on cash and could be forced to seek bankruptcy protection soon if it can't find a refinancing option.
As former customers keep a wary eye on the online version that new owners are planning for the Coldwater Creek women's clothing line, the former company yesterday won confirmation of its bankruptcy debt-payment plan, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Brendan Shannon signed off on the chapter 11 liquidation scheme for the former retailer at a hearing, calling it "a good result in a challenging case." Original projections were that unsecured creditors would get nothing from the bankruptcy, but they will collect from 10 to 17 percent of what they are owed thanks to a deal between the dissolving company and the unsecured creditors’ committee.
