The decision to file Chapter 11 is rarely an overnight one. The deliberation and consultation in the lead-up to bankruptcy can take months, or even years, and the processes involved in filing can be just as rigorous and time-consuming. But — whatever their reasoning and however long it took them to reach that point — fashion firms have been filling up bankruptcy court dockets at an unprecedented rate during the past two years.
And 2017, with barely three months under its belt, has kept the trend going.
Here, nine companies that have sought Chapter 11 protection since the start of the year.
THE LIMITED
Date filed: Jan. 17, 2017
The women’s apparel retailer filed for Chapter 11 bankruptcy protection after closing all 250 stores and slashing 4,000 jobs. An affiliate of private equity firm Sycamore Partners agreed to provide a stalking-horse bid for the company’s intellectual property, which includes its trademarks, website address and social media accounts. On Feb. 21, the firm walked away from the auction with ownership of the retailer’s e-commerce business and intellectual property with a bid of $26.8 million.
LUKE’S LOCKER
Date filed: Jan. 24, 2017
The Dallas-based running specialty store filed Chapter 11 just days after it shuttered five of its eight Texas stores. In its filing, the firm said its assets, with an estimated value of between $1 and $10 million, are equal to its liabilities. The company plans to reorganize and move forward with fewer stores. According to court documents, stiff e-commerce competition was a major factor leading to Luke’s Locker’s bankruptcy.
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SHOES.COM
Date filed: Feb. 2, 2017
After abruptly announcing its plans to shutter all operations immediately, the Canadian e-tailer and former Zappos competitor also took the bankruptcy route. Inverness Group, a general receiver, was appointed on Feb. 2 by the Superior Court of Washington for King County to handle Shoes.com’s remaining assets in the U.S. This receivership process is a form of corporate bankruptcy. Sources told FN that the firm would also file the Canadian equivalent of bankruptcy shortly thereafter.
WET SEAL
Date filed: Feb. 2, 2017
Teen mall staple Wet Seal broke the collective hearts of high school girls everywhere when it announced in early February that it was closing all of its stores. The announcement was accompanied by a notice on Wet Seal’s site, which bid devoted shoppers farewell with the message: “Thanks Babe, It’s Been Real.” This is the second time the chain filed Chapter 11; it also filed for bankruptcy in 2015.
EASTERN OUTFITTERS
Date filed: Feb 5, 2017
Eastern Outfitters, the parent company of Eastern Mountain Sports (EMS) and Bob’s Stores, filed for Chapter 11 protection in Delaware. U.K.-based mega sporting goods chain Sports Direct reached an agreement with the firm to become a stalking-horse bidder at an upcoming bankruptcy auction. Last April Vestis Retail Group, then-owner of EMS, Bob’s and Sport Chalet, filed for bankruptcy and shuttered the Sport Chalet business altogether. After closing eight EMS stores and one Bob’s location due to high real estate costs, the company turned over EMS and Bob’s to funds advised by Versa Capital Management, the Philadelphia-based private equity firm that owned Vestis. Versa then created the entity Eastern Outfitters to house both chains.
MC SPORTS
Date filed: Feb. 14, 2017
In a voluntary bankruptcy petition submitted in Michigan courts, the company said its current assets — valued between $50 and $100 million — are equal to its liabilities. “After a valiant and concerted effort by MC Sports’ associates, vendors, landlords and outside professionals to restructure the company’s balance sheet and operating performance, the company was unable to reach an agreement on a viable out-of-court proposal,” MC Sports president and CEO Bruce Ullery said in the statement. The firm plans to liquidate all 68 of its stores, located across seven Midwest states.
BCBG MAZ AZRIA GROUP
Date filed: Feb. 28, 2017
After much speculation, the company founded by designer Maz Azria in 1989 pulled the trigger late last month. BCBG filed a Chapter 11 plan of reorganization and obtained $45 million in new financing. Its reorganization plan includes a possible sale, merger or similar transaction. The company had said earlier that in February it would close 120 retail stores as part of its restructuring efforts. BCBG is also taking steps to close its freestanding stores in Canada and consolidate its operations in Europe and Japan. Over the past few months, BCBG has laid off more than 100 employees.
GANDER MOUNTAIN
Date filed: March 10, 2017
Gander Mountain Co. is the latest retailer in the outdoor and sporting goods category — which has been disproportionately hit by retail’s challenges — to file for Chapter 11. The St. Paul, Minn.-based company said it will begin the process of shuttering 32 underperforming retail locations in 11 states over the next several weeks. In the face of dismal store traffic, shifts in consumer demand and rapid growth in e-commerce competition, Gander’s management said they determined that a short sale was the only viable solution.
GORDMANS INC.
Date filed: March 13, 2017
Saddled with somewhere between $100 and $500 million in debt, the Midwest-based off-price department store chain this week notified the Nebraska Department of Labor that it plans to terminate 450 employees on May 12 when it closes its Omaha headquarters and distribution center. Despite its bankruptcy filing on Monday, management noted that all of its 106 stores remain open until further notice. Nevertheless, the chain plans to liquidate all inventory. (Gordmans stores are located in 22 states in 62 markets.)
