2017 represented one of the busiest years for Chapter 11 retail bankruptcy filings. Many companies that filed have successfully emerged, like Payless. Yet, some are still questionable as to their future, such as Toys “R” Us, which is expected to begin selling a number of their leases and company owned real estate this quarter.
As the New Year begins, here are 10 retailers to watch for a possible Chapter 11 bankruptcy filing this year:
- Sears Holdings has been listed as a possible bankruptcy filing for a number of years. (Although Sears Canada did file for bankruptcy last year.) With the sale of its Craftsman tools and closing of more stores, just how long can the company avoid the inevitable?
- Bon-Ton is one of a number of stores that Moody’s rated with debt ratings of ‘Caa’ or lower (which represents anywhere from “substantial risk” to the potential for total default on a bond). A filing could be expected in first quarter 2017.
- Guitar Center is the world’s largest retailer of musical instruments. It has about a year and a half to refinance more than $900 million in debt scheduled to mature in 2019, according to USA Today.
- General Nutrition Centers (“GNC”) shares fell more than 18% in November. GNC recently retained investment bank Goldman Sachs to help it analyze alternatives. With its competitor Vitamin World recently using the Chapter 11 process to rid itself of unfavorable leases, GNC is a likely candidate to do the same in 2018.
- Finish Line looks to be continuing the sporting apparel bankruptcies as it continued to close stores in 2016 and 2017, according to indystar.com.
- Crew reported a 12% sales drop for third quarter and said it will close dozens of stores by the end of January 2018, according to CNN Money.
- Claire’s Stores, Inc. has very high outstanding debt. As of Oct. 28, it had cash and cash equivalents of only $25.8 million, down $5.4 million from the previous quarter and had $71 million drawn on its credit facility.
- Bi-Lo is the parent company of grocer Winn-Dixie. Although it survived a 2009 bankruptcy filing, like the similar grocer A&P’s second bankruptcy case, the chain appears in dire straits with about $1 billion in debt.
- Payless Part 2? Although Payless completed its bankruptcy proceedings earlier this year, shedding stores and cutting debt, the company still faces the same challenging market conditions that forced it into bankruptcy.
- Neiman Marcus, the Dallas-based luxury retailer’s faces e-commerce competition and changing consumer preferences. Moody’s noted the company’s hired of a financial adviser to evaluate “strategic alternatives.”
If you are an owner, developer, and/or landlord it is important to know and understand how these changes will affect your shopping center. Stark & Stark’s Shopping Center and Retail Development Group can help.
Our attorneys regularly represent owner, developer and/or landlord throughout the country, in leasing, buying/selling, 1031 Exchanges, refinancing, as well an enforcement activities. One of our primary areas of focus is national bankruptcy representation for owners, developers, and/or landlords.
Currently, our team is providing value-added services to landlords in a number of Chapter 11 cases including: Charming Charlie, Macaroni Grille, Rue 21, Payless, EMS and Eastern Outfitters (aka “EMS Part II”), Gander Mountain, Golfsmith, RadioShack, General Wireless (aka “RadioShack Part II), Fairway Market, A&P, Joyce Leslie and Sports Authority.
For more information on how Stark & Stark’s Shopping Center Group can assist you, please contact the author of this blog.