A corporate restructuring and bankruptcy BLOG

    Express Yourself, Deal of No Deal and Red in the Face

    What's News
    April 26, 2024

    Below is our initial take on recent bankruptcy-related developments:

    Express files for bankruptcy; closing more than 100 stores | CNN

    Fashion retailer Express Inc. has officially filed for bankruptcy with the bankruptcy court in Delaware. In a release on Monday, the company said it also plans to close 95 Express locations and all UpWest locations with closing sales at those stores starting on April 23. 

    S&K Take: Express filed its anticipated bankruptcy on Monday, with a $35 million DIP in hand (the Debtors also recently received $49 million from the government under the CARES Act) and a (non-binding) letter of intent from Phoenix, a JV comprised of WHP Global, Simon and Brookfield, to purchase a “substantial” portion of the Debtors’ assets through a stalking horse bid. Some interesting things to unpack there. First, the DIP is $35 million in new money with a $200 million (ballpark) roll-up, which is on the aggressive end of the spectrum. We are treading far beyond 5 to 1 roll-up territory here, but given the cap stack and 30 day window to figure this case out, it’s probably the only game in town. The LOI raises a bunch of interesting points. First, it’s non-binding—if the Debtors don’t cut a deal, we are headed for a liquidation. The deal calls for a purchase price of $10 million in cash (!!) plus the liquidation value of the “acquired merchandise” which is to be calculated in “a manner reasonably acceptable” to Phoenix. Imagine what that means is going to be discussed at length, particularly if a UCC gets in the mix. Also, the JV envisions a 280-store footprint, which is a far cry from the Debtors’ current 500 store profile. As in any retail case, likely some landlord pain forthcoming. Express’s equity was valued at $525 a share in 2012. Insane how the landscape has changed since.

    Long Island diocese to end bankruptcy without sex abuse deal | Reuters

    The Roman Catholic Diocese of Rockville Centre, New York has asked a judge to end its Chapter 11 bankruptcy. This comes after the Diocese failed to get support from nearly 530 sexual abuse survivors on a proposed settlement of $200 million of their claims against the Diocese. U.S. Bankruptcy Judge Martin Glenn is scheduled to hear the Long Island, New York-based Diocese’s request to dismiss its case on May 9.

    S&K Take: We have talked about these diocese cases a decent amount on this blog, and this turn of events comes as a big surprise. The parties, including survivors, have typically been able to find a resolution in the 30+ other diocese bankruptcies that have been filed in the last 15 years. This case has been in the SDNY court since 2020, expended $106 million in attorneys’ fees and no resolution can be found. The Diocese has asked for a dismissal of its case, which would allow survivor litigation to continue in state court against the Diocese and related parishes. The main point of contention, according to the committee representing survivors is that the parishes had more to give to a settlement, above and beyond the $200 million proposed. The committee has stated that there is room for discussions, but the settlement amount must be improved. The hearing on dismissal is scheduled in front of Judge Glenn on May 9. It will be interesting to see if either side blinks by then. 

    Red Lobster considering bankruptcy filing: report | Fox Business

    Seafood restaurant chain Red Lobster is considering filing for Chapter 11 bankruptcy to renegotiate leases and address long-term contracts and increasing labor costs.

    S&K Take: This one hit the press last week while we were at the ABI conference in DC. Something to keep tabs on although a filing doesn’t sound imminent. King & Spalding has reportedly been retained by the company to team with Alix and evaluate options. A filing would clearly be big news. Not a ton of detail here, so not much to report, although here is to hoping that the company can figure it out and continue to provide for lovers of cheddar bay biscuits.

    The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

    November 18, 2022

    This Week In Crypto Contagion



    Fill out the following form to receive our corporate restructuring and bankruptcy news and analysis.

    Group 25-1