New Chapter 11 Filing - KIKO USA Inc.

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KIKO USA Inc.

  • 1/11/18 Recap: Cosmetics retailer files for bankruptcy and simultaneously busts the narrative that cosmetics are safe in the age of Amazon, Sephora and Ulta Beauty - not to mention a long list of direct-to-consumer e-commerce players. Or does it? Here, the cosmetics retailer with retail stores, an e-commerce channel, and an Amazon.com presence filed for bankruptcy because “its retail sales have not been sufficient to cover its costs, which consist primarily of rent and labor.” In other words, you might as well stop reading because you’ve read this story dozens of times in the last 12 months. Of 29 domestic locations (26 in malls), the company intends to close 24 stores in bankruptcy after failing to negotiate concessions from landlords prior to the filing. It doesn’t own any of its locations (a recurring problem). Remaining locations will be those in big cities: New York, Miami, Las Vegas, Sunrise Florida, and Los Angeles. Tiger Capital Group has been hired to dispose of assets. The go-forward plan is also, frankly, fairly unoriginal. It includes re-focusing on product assortment and targeted in-demand product, (ii) realigning distribution via a focus on the five remaining locations and, seemingly, kiosks (or the like) within third-party retailers, (iii) enhancing the customer experience with better staff/training, (iv) organizational changes, (v) targeting marketing (cha ching, Facebook!), and growing the commerce and Amazon Prime offering (cha ching Amazon). In summary, KIKO S.p.A., the corporate overlord loses its equity but for its DIP loan and Facebook and Amazon benefit. What else is new?
  • Jurisdiction: D. of Delaware (Judge Walrath)    
  • Company Professionals:
    • Legal: Perkins Coie LLP (John Kaplan, Jeffrey Vanacore, Deborah Kennedy) & (local) Saul Ewing Arnstein & Lehr (Mark Minuti, Monique Bair DiSabatino, Sharon Levine)
    • Financial Advisor: Getzler Henrich & Associates LLC (Mark Samson)
    • Claims Agent: BMC Group (*click on company name above for free docket access)
  • Other Parties in Interest:
    • KIKO S.p.A.
      • Legal: White & Case LLP (John Cunningham, Fan He, Robbie Boone Jr.) & (local) Fox Rothschild LLP (Jeffrey Schlerf, Carl Neff)

New Chapter 11 Bankruptcy - Vitamin World Inc.

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Vitamin World Inc.  

  • 9/11/17 Recap: As previously foreshadowed, the Holbrook NY-based specialty retailer in the vitamins, minerals, herbs, and supplements market with 334 mall and outlet center retail locations filed for bankruptcy to disentangle itself from legacy operational ties to prior owner NBTY Inc. and terminate various leases (52 identified so far; 45 locations have already been shuttered). Some of the locations are within malls owned by REITS, Simon Property Group, General Growth Properties, and Vornado Realty Trust. The company blames the bankruptcy filing on liquidity constraints caused by supply chain and ingredient availability issues, the struggling retail market, above market rents, and underperforming retail stores. Prepetition lender, Wells Fargo Bank NA, is providing credit during the bankruptcy cases. 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $14.4mm debt (Wells Fargo Bank NA), $9.5mm "Seller Note" (RE Holdings)
  • Company Professionals:
    • Legal: Katten Muchin Rosenman LLP (Paige Barr, Peter Siddiqui, Allison Thompson) & (local) Saul Ewing LLP (Monique DiSabatino, Mark Minuti)
    • Financial Advisor: RAS Management Advisors LLC
    • Real Estate Advisor: RCS Real Estate Advisors
    • Claims Agent: JND Corporate Restructuring (*click on company name above for free docket access)
  • Other Parties in Interest:
  • DIP Lender: Wells Fargo Bank NA
    • Legal: Riemer Braunstein LLP (Donald Rothman) & (local) Ashby & Geddes PA (Gregory Taylor) 
  • Official Committee of Unsecured Creditors (incl. Simon Property Group, General Growth Properties):
    • Legal: Lowenstein Sandler LLP (Jeffrey Cohen, Bruce Buechler, Mary Seymour) & (local) Whiteford Taylor & Preston LLC (Christopher Samis, L. Katherine Good, Kevin Shaw)
    • Financial Advisor: Berkeley Research Group LLC

Updated 9/24/17

New Chapter 11 Filing - Rent-a-Wreck of America, Inc.

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Rent-a-Wreck of America, Inc.

  • 7/24/17 Recap: When we saw that this company filed for bankruptcy, we were practically drooling. We immediately thought: the narrative had to be an Uber-is-to-blame story for a company like Rent-a-Wreck filing for bankruptcy, didn't it? And so we decided to cover it, despite its relatively small size, writing the following: In Silicon Valley, "disruption" is a buzzword that wide-eyed startup founders use to drum up excitement about their new venture, raise funding, and determine product/market fit. 79-90% of the time - depending on which data you rely on - those companies flame out. But sometimes they don't. And in the even rarer case that a startup doesn't just succeed but becomes a unicorn - or maybe even a decacorn a la Uber - that success is usually to the detriment of other incumbent companies. Take Rent-a-Wreck ("RAWA"). RAWA, through its wholly-owned opco, Bundy, sells and administers franchises for the operation of vehicle rental/leasing/sharing, among other automobile business lines. There are 76 RAWA franchises in 28 US states in addition to some international operations. The company makes its money from franchise fees, servicing fees, and insurance underwriting via a non-debtor insurance subsidiary. Or, we should say, MADE its money. EXCEPT, according to the company's First Day Declaration, this isn't an innovation/disruption story. It's a more mundane cash-flow-draining-litigation story. How disappointing. The company filed for bankruptcy to rightsize its franchise network, stop the bleed from litigation/judgments, streamline ops, and try to maximize the value of its intellectual property. It seeks a $750k DIP from its prepetition lender/equityholder to do so. What a waste of a solid Silicon Valley commentary. 
  • Jurisdiction: D. of Delaware 
  • Capital Structure: $2.47mm secured debt     
  • Company Professionals:
    • Legal: Quarles & Brady LLP (Faye Feinstein, Christopher Combest) & (local) Saul Ewing LLP (Mark Minuti, Aaron Applebaum)
    • Claims Agent: KCC (*click on company name above for free docket access)
  • Other Parties in Interest (no UCC appointed):
    • 100% Equity Owner & DIP Lender: JJF Management Services Inc.

Updated 8/26/17

New Chapter 11 Filing - Tidewater Inc.

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Tidewater Inc.

  • 5/17/17 Recap: First Gulfmark Offshore Inc., now Tidewater: the offshore shakeout is finally upon us. The New Orleans-based publicly-traded offshore operator filed for bankruptcy to effectuate an expedited 6-week prepackaged financial restructuring of the company. This story is so cliche at this point: leverage is high, oil prices are low, E&P activity is down, natural gas is up, liquidity is constrained. Cue Weil and a slew of other restructuring professionals. File bankruptcy. 
  • Jurisdiction: D. of Delaware (Shannon)
  • Capital Structure: $1.95b funded debt. $300mm TL (DNB Bank ASA) & $600mm RCF (BofA), $1.15b unsecured notes, tons of of guarantees and nonsense.    
  • Company Professionals:
    • Legal: Weil (Ray Schrock, Jill Frizzley, Alfredo Perez, Christopher Lopez, Yvanna Custodio, Andriana Georgallas) & (local) Richards Layton & Finger PA (Daniel DeFranceschi, Zachary Shapiro, Christopher De Lillo)
    • Financial Advisor: AlixPartners LLC (David Johnston, Richard Robbins, Jim Trankina, Bruce Smathers)
    • Investment Banker: Lazard (Timothy Pohl)
    • Claims Agent: Epiq Bankruptcy Solutions LLC (*click on company name for free docket)
  • Other Parties in Interest:
    • Independent Directors of the Board
      • Legal: Andrews Kurth Kenyon LLP (Robin Russell, Timothy Davidson)
    • Term Loan Agent: DNB Bank
      • Legal: Milbank Tweed Hadley & McCloy LLP (Dennis Dunne, Tyson Lomazow) & (local) Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti)
    • Credit Agreement Agent: Bank of America
      • Legal: Morgan Lewis & Bockius LLP (Amy Kyle, Edwin Smith, Joshua Dorchak, Matthew Ziegler) & (local) Morris Nichols Arsht & Tunnell LLP (Derek Abbott)
    • Unofficial Noteholder Committee
      • Legal: Paul Weiss Rifkind Wharton & Garrison LLP (Alan Kornberg, Brian Hermann, Sean Mitchell, Kellie Cairns) & (local) Blank Rome LLP (Stanley Tarr, Rick Antonoff, Barry Seidel)
    • Official Committee of Unsecured Creditors
      • Legal: Whiteford Taylor & Preston LLC
      • Financial Advisor: Berkeley Research Group LLC (Christopher Kearns, Mark Shankweiler, Rick Wright, Jeffrey Dunn, Carolyn Passaro)
    • Official Committee of Equity Holders
      • Legal: Brown Rudnick LLP (Howard Steel, Brandon Burkart, Jeffrey Jonas, Steven Pohl) & (local) Saul Ewing LLP (Mark Minuti, Sharon Levine)
      • Financial Advisor: Miller Buckfire & Co. LLC (Matthew Rodrigue) & Stifel Nicolaus & Co. Inc.
    • Post Reorg Board of Directors (Dick Fagerstal, Steven Newman, Larry Rigdon, Randee Day, Alan Carr, Thomas Robert Bates Jr.)

Updated 7/12/17 9:07 am CT