Daily Archives: June 17, 2020

Neiman Marcus received final approval from the U.S. Bankruptcy Court to access the next phase of $675 million in new financing to help it reorganize and start reopening stores.

Financing agreements put in place with a majority of lenders had some contested issues, and those were worked out before the hearing Tuesday when Judge David Jones approved the revised terms.

The company will get access to $250 million now and $150 million more through early September. It originally received approval for $275 million when the bankruptcy was filed on May 7.

The funds provide the retailer with ample liquidity to ensure business continuity as we gradually reopen our stores, invest in fall inventory and fund the expansion of our digital offerings, said Geoffroy van Raemdonck, CEO of Neiman Marcus.

We remain on track to emerge from this process in fall 2020, he said.

Business has been strong in recent weeks, he said. The chain has operated during the coronavirus closings and since with digital stylists and online.

So far, two stores have reopened to customers, NorthPark Center in Dallas and Lenox Square in Atlanta. About 90% of the 43 Neiman Marcus stores are either open by appointment or offering curbside pickup of online and phone orders. Neiman Marcus also owns Bergdorf Goodman in New York. Before its bankruptcy, the company had said that it would close more than 20 Last Call clearance stores this summer.

When the company exits bankruptcy, it will have shed $4 billion of debt from its balance sheet.

As part of the revised financing agreement, Neiman Marcus lenders released any claims to the companys former German subsidiary Mytheresa, which was transferred in 2018 to Neiman Marcus shareholders Ares Management and the Canada Pension Plan Investment Board. That transfer of an asset, which was valued at $1 billion at the time, to the retailers private equity owners was contested in court by bondholder Marble Ridge.

Also, the agreement is no longer an exclusive one, meaning that a third party, such as the creditors committee, could file an alternative plan to pursue claims against Ares and the Canada pension fund. After a contentious hearing two weeks ago, the judge allowed the creditors committee to investigate the transfer of Mytheresa.

A $6 billion leveraged buyout of Neiman Marcus in 2013 by Ares and the Canada Pension Plan doubled the retailers debt and eventually led to its bankruptcy filing.

Twitter: @MariaHalkias

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Neiman Marcus scales hurdles in bankruptcy financing and moves ahead with reorganization - The Dallas Morning News

When states began shutting down dining rooms back in March, many of us expected the industry would be hit by an unceasing wave of bankruptcy filings, particularly as June rolled around and chains ran out of cash.

That hasnt happened. Oh, sure, plenty of companies have sought out debt protection over the past three months. That includes Souplantation and Sweet Tomatoes, the buffet chains that opted to file for Chapter 7 liquidation. Its equipment is getting auctioned off as we speak. Yet there havent been as many as expected.

But others surely are coming. Many companies are in something of a limbo state as they try to work their way through the coming months. Navin Nagrani, executive vice president and operating partner with Hilco Real Estate, describes it as a weird lull.

He also expects a lot more bankruptcies at companies that received rent-deferrals during the pandemic that might come due in the near future.

The biggest potential problems could be among casual dining chains or other concepts that may face sales challenges coming out of the pandemic, anyway, and have sponsors currently questioning the level of investment to put into the business.

Many of these sponsors could opt against adding to their investment, which could prompt such companies to seek out debt protection.

In other words, the industry isnt remotely out of the woods yet, even as sales improved. Many companies are simply trying to figure out the landscape before taking such a drastic step as a bankruptcy filing.

A number of chains are clearly in danger of such a step, anyway. Chuck E. Cheeses owner CEC Entertainment has taken the step of giving its executives bonuses and is working to avoid a filing.

Potbelly, meanwhile, is negotiating with the landlords of 100 restaurants that it wants to close, and could end up seeking a restructuring if it cant get enough of them to agree to have their leases bought out.

Multiple casual dining executives, meanwhile, including Ray Blanchette from TGI Fridays and Aziz Hashim from Ruby Tuesday, warned of numerous potential closures in the casual dining sector. Hashim himself warned of a potential bloodbath.

The problem for many of these companies, however, is a lack of buyers. A handful of companies have set themselves up as buyers of companies out of bankruptcy. No investor provided more of a lifeline to bankrupt restaurant chains than did Landrys owner Tilman Fertitta.

Yet Fertitta isnt exactly in a position to take on more restaurant chains. And many of the other buyers have been nowhere to be seen.

One investor who has stepped in on occasion is Robert Earl, whose Robert Earl Group recently acquired Bravo Cucina Italiana and Brio Tuscan Grille for $29 million, mostly in assumed debt.

For the most part, however, buyers have been distressed debt companies, such as Fortress Investment Group, which acquired both Krystal and the old Craftworks concepts in credit deals.

All that said, the major chain universe appears to have escaped the worst of the pandemic shutdown, and many chains have at least reached the point where they are cashflow neutral. Independent and local concepts with a lot less room for error are in far bigger danger overall, and thousands of those locations could close.

But the world of private equity-owned chains with a lot of debt and little or no growth faces a tough few months.

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Did restaurants escape the bankruptcy wave? Not really - Restaurant Business Online

Hertz, whose car-rental bands also include Dollar and Thrifty, lost almost all their revenue when travel shut down due to the coronavirus this year. Wochit

Weeks after filing for Chapter 11 bankruptcy protectionMay 22, car rental company Hertz is selling vehicles in its fleet at discount prices.

As of Saturday morning, Hertzhadthousands of used cars available on its websiteHertzCarSales.com. The volume of cars for sale in an area depends on the location used in the search, and vehicles are delivered free up to 75 miles.

The coronavirus pandemicforced several companies strained before the crisis to file for bankruptcy to try to survive. J.C. Penney, Neiman MarcusandTuesday Morningare among the chains that filed for bankruptcy since the start of the pandemic. Hertz competitorAdvantage Rent A Car filed for court protection from its creditors May 26.

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Hertz's fleet consists of roughly 700,000 rental cars, which have greatly diminished in value because of a sharp drop in used car prices caused by a freefall in auto sales stemming from the pandemic.

In a search on the Hertz website within 1,000 miles from Fort Lauderdale, Florida, there were more than 23,500 cars available Saturday. A2017Hyundai ElantraSESedan with nearly 71,000 miles was selling for$7,597 $1,740 below market price, according to websiteiSeeCars.com.

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A search within 1,000 miles of Beverly Hills, California, had almost 21,000 cars available Saturday.

Outside the 75-mile radius for free delivery, fees vary. Delivery of 76 to 200 miles costs $300. Within 600 to 800 miles, the cost is $1,000,Hertz says on its website.

Hertz Global Holdings racked up more than $24 billion in debt by the end of March, according to its bankruptcy filing, with only $1 billion in available cash.

Starting in mid-March, the company whose car rental brands include Dollar and Thrifty lost all revenue when travel shut down during the coronavirus crisis. The company made "significant efforts" but couldn't raise money on the capital markets, so it started missing payments to creditors in April, the filing said. Hertz has been roiled by management upheaval, naming its fourth CEO in six years May 18.

In late March, Hertz shed 12,000 workers and put 4,000 on furlough. It cut vehicle acquisitions by 90% and stopped all nonessential spending. The company said the moves would save $2.5 billion per year.

Friday, bankruptcy court approved Hertz's requestto sell 246.8 million unissued shares to Jefferies to raise up to $1 billion in new equity.

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Contributing:Laura Layden, Naples Daily News; The Associated Press

Follow USA TODAY reporter Kelly Tyko on Twitter:@KellyTyko

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Looking to buy a car? Hertz is selling thousands of used cars in its fleet in bankruptcy at bargain prices - USA TODAY

SAO PAULO, June 15 (Reuters) - Brazilian telecoms firm Oi SA announced late on Monday a proposed plan that, if approved by creditors, would allow the company to exit a long bankruptcy restructuring process that began in 2016.

Under the plan, Oi hopes to sell its mobile unit for at least 15 billion reais to refocus the company on its fiber network.

Brazils largest fixed-line carrier had approximately 65 billion reais ($12.65 billion) of debt when it filed for bankruptcy protection.

After selling some non-core assets, including its 25% stake in Angolan carrier Unitel, to release cash for the expansion of its fiber-to-the-home (FTTH) broadband service, Oi now seeks to amend its bankruptcy plan to add its mobile unit to the list of divestments.

All major rivals have expressed interest in buying Ois mobile business.

In March, TIM Participaes SA and Telefonica Brasil SA informed Ois advisor Bank of America of their interest in kicking off talks for a potential acquisition of all or part of Ois mobile division.

Ois efforts to file an amendment proposal to its bankruptcy plan led the company to postpone its first-quarter earnings initially scheduled for May 28.

In a separate filing on Monday, the carrier posted a net loss of 6.3 billion reais in the quarter ended on March 31 compared with a net profit of 679 million reais a year before.

Recurring earnings before interest, tax, depreciation and amortization (EBITDA) reached 1.5 billion reais, above a consensus estimate of 1.439 billion reais. Ois total debt stood at 24 billion reais, while its cash position stands at 6.3 billion reais.

$1 = 5.1371 reaisReporting by Gabriela Mello, editing by Louise Heavens

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Brazils Oi amends bankruptcy plan to add sale of mobile unit - Reuters

Park Transportation Inc. of Bensenville, Illinois, has filed for Chapter 11 bankruptcy.

This action comes after its principal lender, Royal Savings Bank, and its landlord DCT Cargo LLC, filed lawsuits against the carrier because it was unable to pay its financial obligations, according to court filings.

In its filing with the U.S. District Court for the Northern District of Illinois, Park Transportation lists assets of up to $50,000 and its liabilities ranging from $1 million to $10 million. It lists up to 199 creditors in its bankruptcy filing.

At the time of its bankruptcy filing, the carrier had 98 power units and 83 drivers, according to FMCSAs SAFER website. Eric Seongwoo Seo is listed as the president of Park Transportation.

Over the past 24 months, Park Transportations trucks have been inspected 70 times and 25 trucks were placed out of service, resulting in a 35.7% out-of-service rate, which is higher than the industrys national average of around 21%, according to FMCSA data.

Its drivers were inspected 121 times and four were placed out of service in the same two-year period, resulting in a 3.3% out-of-service rate, which is below the national average of around 5.5%. The company has been involved in two tow-aways over the past 24 months.

The company, which hauls general freight, intermodal containers and household goods, also has a warehousing and brokerage division, according to its website.

Read more articles by FreightWaves Clarissa Hawes

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Legal woes force Illinois carrier to file for bankruptcy protection - FreightWaves

Dive Brief:

Retailers of all financial profiles have scrambled to maintain cash positions since the COVID-19 crisis began. Distressed retailers have been thrown into chaos or already sought shelter in bankruptcy. With the country reopening, the crucial need for liquidity has not gone away.

Tailored Brands, which along with Men's Wearhouse owns Jos. A. Bank, Moores and K&G, had seen signs of promise before the pandemic threw it off course. Now, Bloomberg is reporting the company is working with advisers on its debt and considering filing for bankruptcy.

After years of declining sales, the retailer said that comparable sales were up 2.4% in February, with all brands comping positive. But then the pandemic started winding through the country and local and regional governments began ordering nonessential businesses, including apparel stores, to close. Tailored Brands closed all of its stores on March 17 and its e-commerce fulfillment centers on March 20.

To free up liquidity during that period, it pushed out payments to vendors, cut salaries, furloughed or temporarily laid off all store employees and the majority of its corporate staff, and drew down $310 million from its credit facility. With that draw, the company ended Q1 with $244.2 million in cash and cash equivalents (a number that dropped to $201.3 million by June 5), and another $88.8 availability under its revolver.

But it may not be enough. Looking at Tailored Brands by banner, comp sales where stores have been open at least one week were down 65% at Men's Wearhouse, down 78% at Jos. A. Bank and down 40% at K&G. E-commerce comps to date for the second quarter are down 32% not good in an era where apparel retailers are leaning heavily on their digital channels to make up lost store sales.

Without generating cash from sales, the retailer is highly dependent on any capital it can raise. It said in the filing that its liquidity could be further constrained if its bank starts requiring reserves that would cut into the borrowing availability on its asset-based facility. Moreover, if it violates its financial maintenance covenant it could default on the ABL, which could trigger defaults on other debt as well.

How the pandemic will continue to affect the retailer's operations remains "highly uncertain," the company said, pointing to a laundry list of unknowns, including "the duration of the outbreak, new information that may emerge concerning the severity of COVID-19 and the actions, especially those taken by governmental authorities, to contain the pandemic or treat its impact."

If the impact of the pandemic wears on and Tailored Brands can't raise more liquidity, the company said that "we may be forced to scale back or terminate operations and/or seek protection under applicable bankruptcy laws."

CEO Dinesh Lathi said in the release that he expects the company's sales to rebuild "gradually" through 2020. He also said the company had already identified trends toward casualization and in digital marketing that the pandemic has accelerated. He added that "we are pleased to have already made progress transforming our business to address these trends."

With debt of $1.4 billion and liquidity issues, the clock is ticking.

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Tailored Brands says it may have to file bankruptcy if COVID-19 crisis wears on - Retail Dive

U.S. retailers and restaurantsare finally starting to welcome customers again around the U.S., ending months of little to no income. But the future may still be grimand experts believe some mayimmediately call it quits after seeing the reality of operating in the wake of the coronavirus pandemic.

As the consumer comes back, its not like turning on and off a light switch, Coresight Managing Director of Luxury and Fashion Marie Driscoll said.

It is going to be gradual and depending on how gradual it is and how safe consumers feel going back to the stores that is going to influence the productivity of the stores and whether or not there are morestore closingsand ... bankruptcies.

Bisnow/Mark F. Bonner

New York City still isn't totally open for business.

This year has already been rough for retailers: Coresight Research reports15 major U.S. retail bankruptcies in the first five months of 2020, including JCPenney, Pier 1 Imports,Neiman Marcus,True Religion Apparel, J. Crew and Papyrus.

Coresight has tracked 4,005 store closures so far this year and is projecting20,000 to 25,000 total will shutterin 2020.

Experts in the bankruptcy space expect an even bigger surge ofChapter 11or Chapter 7 bankruptcy filings by the third quarter.

Veteran bankruptcy attorney Gregory Wade with the law firm of Wade, Grimes, Friedman, Meinken & Leischner saidthe third quarter may be when the impact of the coronavirus pandemic is fully understood, particularly with so many businesses and individuals staying afloat right now on government Paycheck Protection Programloans and unemployment.

Right now, we have never had this before because the government through its economic incentives is literally propping up the [companies], Wade said. It's almost as if what the federal government did was it took its own notion of a Chapter 11 and said, 'OK, we are going to prop up the economy for a few months and see what happens,' but when this stops, it could be a bloodbath.

That bloodbathhas the potential to clog up the bankruptcy courtsfor months on end.

I think its going to come in a rush, Wade said. You have all of these problems that are building up, and when the government stops putting that money in, you are going to have a cascade of bankruptcies, both commercial and consumer.

Even as retailers open to the public, they face financial struggles. In Coresight Research'sMay 27 consumer survey,half of consumers who reported changes in their post-pandemic spending habits believe it will take five to six months before retailbuying habits return to normal.

I am sort of baffled that we havent felt more stress [on restaurants and retail] yet, said bankruptcy attorney Megan Murray, founder of Tampa-based law firm Underwood Murray P.A.

Murray has seen an increase in bankruptcy filings from both restaurants and stores dining facilities are taking as much of a hit as goods retailers even though they remained viable parts of the experiential retail economy before the pandemic. Restaurants are low-margin businesses and stalled traffic has takenits toll on restaurant revenue, resulting in restaurant chains like the parent company of Brio Tuscan Grillfiling for bankruptcy reorganization.

Retailers and restaurants arehaving to make hard decisions about whether they need to file for Chapter 11 or Chapter 7 to salvage their businesses through a bankruptcy reorganization or to just escape the financial squeezealtogether by liquidating locations and assets.

I definitely have seen an increase [in filings], Murray said. We have a few big ones here in Florida. I have seen other ones across the country.

Wikimedia/Steve Morgan

Pier 1 Imports is one major retailers that filed for bankruptcy this year.

For some of these retailers and restaurants, bankruptcy is not about a long-standing financial battle against Amazon ande-commerce, but rather a strategy to keep the lights onduring a temporary downturn.

I think its being used in the traditional 'I need breathing room, and I need to figure out how I am going to come out of this as a living, breathing company,' Murray said.

Thus far, landlords and lenders have largely giventhat kind of breathing room for the last three months outside of the bankruptcy process. But Stark & Stark bankruptcy attorney Joseph Lemkinsaid bankruptcies will accelerateif landlords and creditors reach a point where they no longer can justify forbearances and other savings mechanisms for retail tenants who cannotpay the rent.

There will be more [bankruptcies] because I think a lot of what was happening is in certain areas, the landlords have held off on being aggressive, Lemkin said.

It's not all grim news for retailers, however. Many are surprised when they do reopen to find that productivity levels are better than expected, although not yet at pre-crisis levels, Driscoll with Coresight said. The Chapter 11 option also gives retailers the flexibility to rebuild their brands and escape expensive liabilities.

Bankruptcies can give a retailer wiggle room in terms of exiting leases that they otherwise would not be able to contractually and it allows them to restructure their debt, Driscoll said.

She saidback-to-school and holiday sales will be major tests for retailers this year since many retailers use these periods to determine if it's time to file for bankruptcyin the coming year.

Forsome, there's a risk the effects of the pandemic could prevent them from surviving until the holiday shopping season.

As your vendors see how tenuous your business is, a lot of vendors wont ship to [those] retailers, and they [can] actually push the retailer into bankruptcy. These are totally unprecedented times, Driscoll said.

Murray thinks even those companies that survive 2020 without going bankrupt will not look the same.

I think once the PPP money runs out and some restaurants and retailers make a pivot and decide they are going to change their structure for good, they are not going to open in the same ways, she said. I think we are going to have some real lasting effects. We may not be feeling anything yet.

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Expect Another Wave Of Retail Bankruptcies By Year's End - Bisnow