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On the heels of The Limited bankruptcy filing, another retailer appears to be on the precipice of Chapter 11.

Gymboree (Gymboree Corp.) reported yesterday that its CEO, Mark Breitbard, will be stepping down once a successor is appointed. Breitbard will assume the role of Chairman of the Board effective February 1st.

Continue Reading Gymboree – Next Retailer Chapter 11 Bankruptcy Filing?

As predicted last week, U.S. women’s apparel chain The Limited filed for Chapter 11 bankruptcy protection today in the United States Bankruptcy Court for Delaware on Tuesday, after closing all 250 stores, under case number 17-10124. See 10 Retailers to Watch for Possible Bankruptcy Filings in 2017.

This filing continues the trend in the competitive retail apparel industry with shrinking margins, high debt loads, and changing shopping habits of Baby-Boomers and Millennials.

Although The Limited’s stores are closing, the name may continue Continue Reading Retailer, The Limited, Files for Chapter 11 in Delaware

2016 ended on a high note with higher than expected holiday sales and overall a better real estate market. However, there were a number of retailers that sought bankruptcy protection. Some of the retailers, like Fairway and EMS, emerged as new entities in Chapter 11 bankruptcy proceedings while their operations continued. Yet others, like Sports Authority and PacSun, closed their doors, leaving open spaces for landlords.

Continue Reading 11 Retailers to Watch for Possible Bankruptcy Filings in 2017

On the heels of the Joyce Leslie and Sports Authority Chapter 11 bankruptcy filings, another retailer just filed for Chapter 11 bankruptcy protection, and it appears that two (2) more retailers are preparing to file to reorganize.

PacSun, more formally known as Pacific Sunwear of California, Inc., just filed for Chapter 11 bankruptcy protection this morning in the United States Bankruptcy Court for Delaware, docket # 16-10882. High debt forced the teen retailer of surf/beachwear to file. PacSun operates 600 stores and is expected to close a number of stores either after the big back to school or holiday season. It lists total assets of $298,853,000 and liabilities of $305,056,000 in its petition.

Continue Reading PacSun Files for Chapter 11 protection in Delaware – Next Batch of Expected Retail Chapter 11 Bankruptcy Filings

This morning, Sports Authority, Inc. (“Sports Authority”) filed for Chapter 11 bankruptcy protection in the United States District of Delaware, Bankruptcy Court, case # 16-10529. The retailer with more than 450 stores is expected to close about 140 locations within the bankruptcy proceeding. Sports Authority was once the biggest sporting-goods chain in the U.S., but over the past few years has had difficulty competing with Dick’s Sporting Goods Inc., Lululemon Athletica Inc., Gap Inc.’s Athleta, and Amazon.com, Inc.

Landlords Beware

If you are a landlord, you will want to know:

  • Will they remain a tenant?;
  • When will rent be paid?;
  • Are there pre-petition claims that are owed?;
  • Is the Debtor in default of pre-petition non-monetary obligations?; and,
  • What other damages are owed (both pre- and post-petition)?

Trade Creditor Questions

Trade creditors, including suppliers, should also be asking important questions, such as:

  • Have you been paid on time and does a reclamation claim (right to take back goods shipped, unpaid within 45 days) exist?;
  • Can an administrative claim be asserted?; and,
  • Should a proof of claim be filed, and if so, how?

If you are a trade creditor with reclamation claims, then it is vital to assert your rights now.

Stark & Stark’s Bankruptcy & Creditors’ Rights Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvania on a variety of issues.

For more information on the Sports Authority filing, and how Stark & Stark can assist you, please contact Stark & Stark’s Bankruptcy & Creditors’ Rights Group.

Sports Authority, Inc. (“Sports Authority”) appears to likely be the next big tenant Chapter 11 bankruptcy filing. Recent reports are indicating that the sporting and apparel chain is preparing to file for Chapter 11 bankruptcy protection, as debt payments are due in 10 days, according news reports from Bloomberg Business and other outlets. Of its 450 stores,Bloomberg reports that Sports Authority plans to close as many as 200 locations within a bankruptcy proceeding.

Sports Authority was once the biggest sporting-goods chain in the U.S, but over the past few years has had difficulty competing with Dick’s Sporting Goods Inc., Lululemon Athletica Inc., Gap Inc.’s Athleta, and Amazon.com Inc.

Landlord’s Questions

If you are a landlord, it’s a good idea to review your accounting and call any defaults that may exist. Furthermore and operationally, you may want your property manager to speak with the store manager to obtain important security code, HVAC, and utility information, if you don’t already have it on hand. If a store is rejected or abandoned in a bankruptcy proceeding you don’t want to be scrabbling for that information after the fact.

If Sports Authority does file for file bankruptcy protection, some vital questions are: (1) Will they remain a tenant?; (2) When will rent be paid?; (3) Are there pre-petition claims that are owed?; (4) Is there Debtor in default of pre petition non-monetary obligations?; and (5) What other damages are owed (both pre- and post-petition)?

Trade Creditor Questions

Trade creditors, including suppliers, should also be asking important questions such as: (1) Have you been paid on time and does a reclamation claim (right to take back goods shipped, unpaid within 45 days) exist?; (2) Can an administrative claim be asserted?; and (3) Should a proof of claim be filed, and if so, how?

It’s a good idea for commercial landlords and trade creditors to speak with bankruptcy counsel now to formulate and execute a plan in the event of the likely bankruptcy filing. Stark & Stark’s Creditor’s Rights Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvania on a variety of issues. For more information the Sports Authority filing, and how Stark & Stark can assist you, please contact Thomas Onder, Shareholder at (609) 219-7458 or tonder@Stark-Stark.com. Mr. Onder writes regularly on commercial real estate issue and is a member of ICSC and Chair of the 2016 ICSC PA/NJ/DE Next Generation Committee.

The healthy but affordable grocery store chain, Fresh & Easy, filed for Chapter 11 bankruptcy protection in Wilmington, Delaware on Friday. The chain operates 97 stores in Arizona, California and Nevada. This, like the recent Great Atlantic & Pacific Tea Co. (“A&P”) bankruptcy case, is the company’s second Chapter 11 filing in recent years.

Bankruptcy documents filed on Friday named Amir Agam of FTI Consulting Inc. as the Chief Restructuring Officer. The documents listed the debtor’s assets as between $10 and $50 million, with debts between $100 and $500 million.

This recent filing should serve as a warning to property owners. Landlords need to ensure that their claims are assets and are protected in the bankruptcy case. Like the A&P case, there will most likely be a number of auctions and discrete sales of the leases. It is vital that landlords contact counsel and develop a plan for their next steps.

Stark & Stark regularly represents landlords and trade creditors in Chapter 11 proceedings across the country, including filings in New York and Delaware. Whether or not you contact our Commercial, Retail, Industrial and Multi-Family Practice Group, landlords and trade creditors are strongly encouraged to contact legal counsel immediately.

In the last few days, hundreds of bankruptcy complaints against trade creditors were filed by bankrupt Chapter 11 debtor RadioShack. The crux of the complaints concern “preferences” requesting the return of money received from bankrupt debtors prior to the bankruptcy filing for goods or services sold. However, before you or your business start writing a check to return hard earned money, you should know that you may have defenses that can be asserted.

What is Preference?

To start, a preference is a payment received from a debtor, made within 90 days of the bankruptcy filing. Bankruptcy Code section 547(b) allows a bankruptcy trustee or debtor-in-possession (in this instance, RadioShack) to avoid these payments if the transfers were to or for the benefit of a creditor on account of an antecedent debt but while the debtor was insolvent (unable to pay the debts owed).

When Congress enacted the Bankruptcy Code, the policy behind preferences was to level the playing field for all creditors by not allowing a creditor to receive more than it would have within the debtor’s bankruptcy case. Continue Reading Trade Creditors Protect Yourselves: RadioShack Filing Bankruptcy Preference Complaints

It’s just a few days away! The papal visit is expected to bring more than 2 million visitors to the Philadelphia area. Our last two articles (here and here) dealt with the positive economic impacts for the region and managing the masses during this event. Here are five (5) tips that should be at the top of the list for landlords and owners of commercial, retail and multi-family properties.

Review your Leases. With an event of this magnitude, it is a good time to take a last minute look at your leases to ensure all items are appropriately addressed. For instance, does your lease have certain notice requirements for limiting access to parking areas designated for tenants and their customers? If you plan on sectioning off certain parking areas, did you send notice out in time? Sometimes leases will have a provision that allows you to circumvent certain notice requirements, if actions are done for health and safety reasons.

Continue Reading Pontiff’s Visit to Philadelphia (Part III) – Top Five (5) Last Minute Tips for Landlords/Owners

Recently, several shopping center retail stores have filed for Chapter 11 bankruptcy protection in the District of Delaware. Wet Seal, Inc. (“Wet Seal”) filed on Friday, January 16, 2015 (docket # 15-10081), Cache, Inc. (“Cache”) filed on February, 4, 2015 (docket #15-10172), and most recently, RadioShack Corporation (“RadioShack”) filed on February 5, 2015 (docket #15-1097).

Wet Seal operates 173 stores in 42 states and Puerto Rico. Prior to filing, Wet Seal closed 338 around January 7, 2015. Cache, which hasn’t turned a profit since 2011, has closings planned for some of its remaining 200+ stores. For more detail about the Wet Seal and Cache filing, check out this Wall Street Journal article.

RadioShack, after posting losses in 11 consecutive quarters, has plans for selling off up to 2400 of its stores, as well conducting “going out of business sales,” where “buyers will be able to bid on RadioShack’s assets during bankruptcy.” (Reuters)

The question for Landlords and trade creditors of the Debtor are when and how they will be paid?

Landlord’s Questions

Landlords need to ask important questions, like:

  1. Is the Debtor remaining a tenant?;
  2. Is the Debtor closing the store?  If so, do they plan going out of business sales in violation of the lease;
  3. Does the Debtor plan on assigning its leases? If so, will the assignments violate existing restrictions with other tenants?;
  4. When will “stub” rent (the rent between the petition date and the next regular monthly payment) be paid?;
  5. Are there pre-petition claims that are owed?;
  6. Is there Debtor in default of pre-petition non-monetary obligations?; and,
  7. What other damages are owed (both pre- and post-petition)?

Trade Creditor Questions

Trade creditors, including suppliers should also be asking important questions:

  1. Does a reclamation claim exist (a right to take back goods shipped, but unpaid within 45 days)?;
  2. Can an administrative claim be asserted?; and,
  3. Should a proof of claim be filed, and if so, how?

It is imperative that commercial Landlords and trade creditors, including suppliers of goods shipped within 45 days, but unpaid, speak with sound bankruptcy counsel immediately to formulate and execute a plan that will obtain their objectives in a quick and efficient manner.

Stark & Stark’s Bankruptcy & Creditor’s Rights Group can help. Our bankruptcy attorneys regularly represent landlords in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvanian on a variety of issues. For more information about the Wet Seal filing and how Stark & Stark can assist you, please contact Thomas Onder, Shareholder at (609) 219-7458 or tonder@Stark-Stark.com. Mr. Onder writes regularly on commercial real estate issue and is a member of ICSC and Chair of the 2015 ICSC PA/NJ/DE Next Generation Committee.