Bloomberg Finds Chapter 22s "Enticing"

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Ah, Poor Headlines...

Bloomberg is getting a little lax here with this headline, "Filing 'Chapter 22' Becomes Enticing Option for Ailing Retailers." We get what they're TRYING to say here which is that restructuring retail right now is really tough. And that a number of retailers, e.g., Wet Seal, American Apparel, General Wireless & Eastern Outfitters, have filed for bankruptcy twice in a short time span. Get it? Chapter 11 + Chapter 11 = Chapter 22. So creative these restructuring folk. Anyway, we've highlighted this issue too (see "Rewind II" here). But to suggest that filing a 22 is "enticing" is a bit of a stretch, yeah? All four of those businesses are effectively gone now and a lot of investor money was lost along the way: not much "enticing" about any of that. But they make tons of money and we do a free newsletter so what the hell do we know? P.S. the article short-changed the industry-agnostic, cough, appeal, of a chapter 22: it neglected to mention Venoco LLC and the possibility of a few solid oil and gas 22s to come. 

Return of American Apparel

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Dov Charney is making a comeback. And now so is American Apparel, which intends to launch its new website on August 14. For those who need a reminder, American Apparel filed for bankruptcy back in November - for a second time in a year - and sold its IP to Gilden Activewear SRL, a Canadian company, for over $80mm. It looks like the new era is set to begin.

News for the Week of 01/15/17

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  • Canada. Predicting lots of doom and gloom.
  • Covenants. Some developments in the capital markets thanks to recent activity with makewhole provisions - including "the end of covenants?". 
  • Fees. It was only a matter of time before there was a new chapter in the always inevitable vilification of restructuring professionals due to fees. Instead of a front page story about Lehman or TXU in the WSJ, here the Houston Chronicle highlights oil and gas cases.
  • Fund Performance. Bloomberg does IR work for Brigade Capital Management, highlighting the asset management company's purported big '16. And for Mudrick Capital, noting the fund's turnaround after a period of high profile poor performance.
  • Let's Get Technical. For you geeks who love worrying about CDS, high yield bonds and liquidity, this report is for you.
  • Municipal Trouble: we've talked about Dallas in the past and now Providenceis in the crosshairs.
  • North Dakota: In a shocking development, the state's forecasts did not account for the upheaval in the energy space: just a mere billion short.
  • Radio. Pros focused on radio-based media situations ought to take note of what is happening in Norway, which is now the first country to completely switch off its FM radio network and convert entirely to digital. Meanwhile, in the streaming music space, Soundcloud bankruptcy rumors continue to increase (we called it).
  • Sears. We're tempted to run a pool to gauge when this sucker FINALLY files for bankruptcy but like the villain in Die Hard, Lampert will probably find a way to keep the thing coming back.
  • Rewind I: Garden Fresh Restaurant has sold to Cerberus Capital Management in bankruptcy. Sun Capital's pain is Cerberus' gain. Speaking of Sun Capital, it seems they made out okay with their Limited investment thanks to distributions and dividends. To summarize, they made 1.8x their initial $50mm investment. And 4000 people are losing jobs.
  • Rewind II: Gilden Activewear Inc. will acquire American Apparel for $88mm, a premium to the original stalking horse bid. Meanwhile, Nasty Gal received approval to sell its brand and customer information for $20mm. Wet Seal, meanwhile, looks headed towards a Chapter 22 at best and a liquidation at worst - not long after Versa Capital bought it out of bankruptcy for $7.5mm.
  • Rewind III: Jawbone continues to struggle as the wearables space continues to consolidate.
  • Chart of the Week: 
  • Tweet of the Week: 

News for the Week of 11/27/16

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  • Avaya. The long-rumored and awaited Chapter 11 filing may be imminent.
  • Buzzfeed. Buzzfeed acqui-hired Ben Kaufman, former high-flying CEO of the bankrupted Quirky to try and crack the elusive e-commerce nut. 
  • Dallas. Police and firefighter pensions threaten to push the growing city into municipal bankruptcy.
  • Payless Shoes. Australian operations may prove to be a leading indicator for what's to come in the U.S. Meanwhile, as retailers fall into bankruptcy left and right, once-bankrupt Circuit City is scratching and clawing to a (potential) re-emergence. While American Apparel got pantsed last week, it seems that Abercrombie is getting closer to losing its shirt (#dadjoke?).
  • Sun Capital. Fresh on the heals of the Garden Fresh bankruptcy, it looks like another portfolio company is on the verge of a restructuring as The Limited Stores - with a not-so-limited 243 locations - has hired Guggenheim Partners to explore strategic alternatives. Other accounts indicate that this may be an IP asset sale in the vein of American Apparel. 
  • Rewind: Coal. Last week we highlighted the contradiction between what is happening in the coal industry and what President-Elect Trump says will happen. In another blow to coal, generally, Canada announced this week that intends to fully phase out coal by 2030.
  • Chart of the Week: