The Richmond Federal Courthouse. (BizSense file photo)
Add the parent company of clothing stores Ann Taylor, Loft and Lane Bryant to the list of retailers to stumble into Richmond for the safe haven of bankruptcy.
Ascena Retail Group, which owns those three brands, along with Justice and Lou & Grey, filed on Thursday its massive Chapter 11 case in federal court in Richmond, seeking to restructure its finances and get more than $1 billion in debt under control in the face of a battered retail sector made worse by the coronavirus pandemic.
While good news for the usual bevy of local bankruptcy attorneys that will land work on the case for the foreseeable future, it could prove to mean more bad news for local malls.
Ascena said it plans to cut an untold number of its stores in North America as a cost-cutting measure.
The Mahwah, New Jersey-based company has Loft and Justice stores in both Short Pump Town Center and Chesterfield Towne Center. Ann Taylor also is in the Short Pump mall, and Lane Bryant has two area locations in Hanover Square South in Mechanicsville and Chesterfield Crossing in Midlothian.
Those stores all remain open for now.
The company said it will close a “significant number” of Justice stores and a “select number” of its other brands’ locations. It did not specify exact counts or locations. It said a final store count will depend on negotiations with its landlords.
It will close all its stores in Canada, Puerto Rico and Mexico, and will shutter all of its plus-size chain, Catherines.
Ascena’s troubles precede the pandemic. The resulting economic slowdown only exacerbated its problems. Last year it was forced to close all locations of its Dressbarn chain, including four in the Richmond region.
Ascena’s filing on Thursday includes Chapter 11 cases for more than 60 affiliates. That brings with it plenty of work for Richmond-based attorneys, several of whom already had clocked in on Thursday for either the debtor or creditors.
Cullen Speckhart of the Cooley law firm landed the coveted role of local counsel for the Ascena’s main bankruptcy counsel, Kirkland & Ellis. Speckhart was previously with Wolcott Rivers Gates.
Local attorneys from Whiteford, Taylor & Preston, and Hunton Andrews Kurth, have landed work thus far.
Ascena, like many before it, chose the Richmond division of the U.S. Bankruptcy Court, housed in the federal courthouse on East Broad Street, due to its reputation for handling complex corporate bankruptcies in a way that some view as favorable to large debtors.
That helps lure companies that aren’t based here, as bankruptcy rules allow firms to file in virtually any district in which they conduct business.
Retailers seem to be one of the industries most attracted here for their liquidations and restructuring. Toys ’R Us and Gymboree are two of the bigger retailers to come in recent years, followed earlier this year by J. Crew. Richmond’s reputation also attracts large non-retail companies, most notably this year, Intelsat, the Luxembourg-based satellite telecommunications company.
Law firms with Richmond attorneys scoring work this year on J.Crew and Intelsat include Kutak Rock, McGuireWoods, Hunton Andrews Kurth, Sands Anderson, Troutman Sanders, Williams Mullen, Woods Rogers, Hirschler, Spotts Fain, Eckert Seamans, Tavenner & Beran and Reed Smith.
Hourly rates paid by the debtors in those cases range from $400 to upwards of $1,600, on top of six-figure retainers.
The Richmond Federal Courthouse. (BizSense file photo)
Add the parent company of clothing stores Ann Taylor, Loft and Lane Bryant to the list of retailers to stumble into Richmond for the safe haven of bankruptcy.
Ascena Retail Group, which owns those three brands, along with Justice and Lou & Grey, filed on Thursday its massive Chapter 11 case in federal court in Richmond, seeking to restructure its finances and get more than $1 billion in debt under control in the face of a battered retail sector made worse by the coronavirus pandemic.
While good news for the usual bevy of local bankruptcy attorneys that will land work on the case for the foreseeable future, it could prove to mean more bad news for local malls.
Ascena said it plans to cut an untold number of its stores in North America as a cost-cutting measure.
The Mahwah, New Jersey-based company has Loft and Justice stores in both Short Pump Town Center and Chesterfield Towne Center. Ann Taylor also is in the Short Pump mall, and Lane Bryant has two area locations in Hanover Square South in Mechanicsville and Chesterfield Crossing in Midlothian.
Those stores all remain open for now.
The company said it will close a “significant number” of Justice stores and a “select number” of its other brands’ locations. It did not specify exact counts or locations. It said a final store count will depend on negotiations with its landlords.
It will close all its stores in Canada, Puerto Rico and Mexico, and will shutter all of its plus-size chain, Catherines.
Ascena’s troubles precede the pandemic. The resulting economic slowdown only exacerbated its problems. Last year it was forced to close all locations of its Dressbarn chain, including four in the Richmond region.
Ascena’s filing on Thursday includes Chapter 11 cases for more than 60 affiliates. That brings with it plenty of work for Richmond-based attorneys, several of whom already had clocked in on Thursday for either the debtor or creditors.
Cullen Speckhart of the Cooley law firm landed the coveted role of local counsel for the Ascena’s main bankruptcy counsel, Kirkland & Ellis. Speckhart was previously with Wolcott Rivers Gates.
Local attorneys from Whiteford, Taylor & Preston, and Hunton Andrews Kurth, have landed work thus far.
Ascena, like many before it, chose the Richmond division of the U.S. Bankruptcy Court, housed in the federal courthouse on East Broad Street, due to its reputation for handling complex corporate bankruptcies in a way that some view as favorable to large debtors.
That helps lure companies that aren’t based here, as bankruptcy rules allow firms to file in virtually any district in which they conduct business.
Retailers seem to be one of the industries most attracted here for their liquidations and restructuring. Toys ’R Us and Gymboree are two of the bigger retailers to come in recent years, followed earlier this year by J. Crew. Richmond’s reputation also attracts large non-retail companies, most notably this year, Intelsat, the Luxembourg-based satellite telecommunications company.
Law firms with Richmond attorneys scoring work this year on J.Crew and Intelsat include Kutak Rock, McGuireWoods, Hunton Andrews Kurth, Sands Anderson, Troutman Sanders, Williams Mullen, Woods Rogers, Hirschler, Spotts Fain, Eckert Seamans, Tavenner & Beran and Reed Smith.
Hourly rates paid by the debtors in those cases range from $400 to upwards of $1,600, on top of six-figure retainers.
Certainly a lucrative time for local bankruptcy counsel involved in the recent spat of ch11 cases — probably as good as it gets. If Dems take the Senate, there’s a very good chance that the Bankruptcy Venue Reform Act gets passed, which would prevent these types of cases from being brought here in Richmond (unless they’re HQed or have majority of assets here).
I think this is a necessary reform. The 2005 BAPCPA has been extremely generous to corporate entities, meanwhile individual debtors looking for relief had significantly more obstacles placed in their way, including strict prohibitions on exactly the kind of “forum shopping” that these corporate entities have availed themselves of.