Weil Grabs Roles on 2 More Retail Bankruptcies
Women's accessories chain Claire's Stores Inc. has filed for bankruptcy in Delaware, the latest Chapter 11 role for a retailer advised by Weil, Gotshal & Manges.
March 19, 2018 at 06:25 PM
4 minute read
The original version of this story was published on The American Lawyer
Claire's Stores Inc., a mall staple for decades that has pierced the ears of more than 100 million customers worldwide, filed for bankruptcy Monday in Delaware.
The latest casualty in the struggling brick-and-mortar retail market, Claire's noted in its Chapter 11 filing that it had reached an agreement with creditors to restructure $1.9 billion in debt.
Last week, Wayne, New Jersey-based Toys“R”Us Inc. announced that it would close or sell all of its stores following its Chapter 11 bankruptcy filing last year.
For its own Chapter 11 case, Claire's has turned for outside counsel to Weil, Gotshal & Manges and Delaware's Richards, Layton & Finger. The fashion jewelry retailer, which also owns the Icing store chain, lists assets and liabilities of $1 billion to $10 billion in its bankruptcy petition.
Ray Schrock and Matthew Barr, co-chairs of Weil's business finance and restructuring department, are leading a team from the firm representing Claire's that also includes partner Ryan Preston Dahl, who joined the firm in January from Kirkland & Ellis.
Schrock, who was named one of The American Lawyer's top lateral hires of 2014 when he also joined Weil from Kirkland, has represented other struggling clothing and fashion retailers, including teen retailer Aeropostale Inc., which filed for bankruptcy in 2016.
Schrock is also currently advising Tops Markets, a Williamsville, New York-based supermarket chain that filed for bankruptcy late last month in Manhattan, citing falling food prices and increased competition from Amazon.com Inc. Schrock is working on that case with Weil's Sunny Singh, promoted to partner at the firm, almost a decade after he put in long hours on the bankruptcy of now-defunct Lehman Brothers Holdings Inc.
Weil has not yet filed billing statements in the bankruptcies of Tops Markets or Claire's, the latter of which was started in 1961 as wig retailer Fashion Tress Industries. in 1973, Fashion Tress bought Claire's Boutiques, a Chicago-based jewelry store chain for women and teenage girls. Five years later the company began its iconic ear-piercing business.
The bankruptcy filing of Claire's stems from its $3.1 billion leveraged buyout in 2007 by private equity giant Apollo Global Management. That deal, which saw Morgan, Lewis & Bockius and Simpson Thacher & Bartlett take lead advisory roles for Apollo and Claire's, respectively, has left Claire's with a substantial debt load.
Efforts to implement new initiatives to offload some of the retailer's debt have largely been stymied by a distressed retail market and falling mall foot traffic, Claire's said in court filings. The company, now based in the Chicago suburb of Hoffman Estates, Illinois, withdrew plans for an initial public offering in early 2017.
But with financial commitments from a group of creditors, including Apollo, Elliott Management Corp. and Monarch Alternative Capital, as well as its unique positioning in the marketplace thanks to its in-person ear-piercing services, the retailer expects to emerge from Chapter 11 by September 2018, with over $150 million of liquidity, the retailer said in a statement.
“These services establish a unique level of trust with customers (and their families) that cannot be replicated by shopping online,” said Claire's CFO Scott Huckins in his declaration.
Weil has not yet filed billing statements detailing its work for Claire's and Tops Markets. Prime Clerk LLC, a bankruptcy claims administrator started by former Weil bankruptcy partner Shai Waisman, has been appointed as a claims and noticing agent in the Claire's case.
Prime Clerk also picked up a role in February for bankrupt Fieldwood Energy, which is being advised by Weil in Chapter 11 proceedings in Houston. Weil recently disclosed in court filings that Fieldwood had paid it nearly $7.1 million in the 90 days prior to its bankruptcy filing.
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