This week’s rundown on the most exciting content in the turnaround / restructuring space is just a scroll away. Thanks for tuning in. As always, please feel free to share, send a shout to contact@weakform.com, or visit us at weakform.com/rererecap.
Hertz bankruptcy gets rolling
Rental car giant Hertz’s Chapter 11 filing has developed over the past week as the “of course they did” story of COVID-19 travel bans flowing through the supply chain of roller bags, airport meals, and final-destination rental upcharges (we’ve all been there).
Hertz leases its fleet of around 700k vehicles from special purpose entities who sell bonds collateralized by the cars. There’s concern that rapidly depreciating vehicles are going to cost creditors more than $900m over the course of the bankruptcy.
Carl Icahn was Hertz’s biggest shareholder (coming in around 39%) and sold out for a loss of $1.6b. “C’mon!” says Carl.
There’s also been some kicking and screaming about bonuses paid out to executives ($16.2m to 340 people) just before filing, but isn’t there always?
In other related news: Advantage Rent A Car filed for Chapter 11 on Tuesday (5/26). If you’re looking to buy a used rental car… looks like the market’s going to have some supply available.
Tuesday Morning wakes up with a headache
I’ve never set foot in one of Tuesday Morning’s stores. And without an ecommerce option, I can’t even check it out virtually. Are the shelves as chaotic as I’m imagining? Someone, please @me with a reply.
Anyway, the company—which sells off-price home goods—filed for Chapter 11 on May 27 (actually a Wednesday) in the Northern District of Texas - Dallas Division.
The company has been hit especially hard by the COVID situation, because again, you know, it doesn’t have an ecommerce website. We’re all stuck at home and can’t even buy NapaStyle brand home decor from $TUES. Rough.
The company plans to exit Chapter 11 in late fall as a reorg’d company with about a 450-store footprint.
They’re just the last in the onslaught of retailers who have been feeling the pandemic pressure and turning to bk for protection: J. Crew, Neiman Marcus, Stage Stores, J.C. Penny, etc.
Hopefully the weekend is kinder to them.
Le Pain Quotidien feels the pain, files Chapter 11
But don’t worry, New Yorkers—you’ll still be able to get your croissants after this is all over.
LPQ is hoping to re-open 35 (of it’s current 98) restaurants after an asset sale to Aurify Brands (owner of Five Guys and Melt Shop). We’ll see if they can rise to the challenge.
It’s worth noting that LPQ was planning to execute this sale-process recipe before the global pandemic hit, due to doughy demand. But let’s move to other news before I bake up more terrible bread puns.
ICYMI: Cirque du Soleil swings trademarks around
In a move that’s popularly known to lenders as getting “J. Screwed” (a reference to J. Crew’s landmark legal-but-definitely-not-lender-approved subterfuge), Cirque moved its trademark assets into a subsidiary that it then used to secure $50m in rescue financing, which it has since flown through (after skipping a debt service payment). Debtwire has some good coverage (membership paywall) and you can also read about it in the New York Post here.
Also, the good folks over at NPR’s Planet Money did a great podcast episode about J. Crew’s trademark financing chicanery.
Just some miscellany:
Medium: This author sees the Pandemic as a cleansing fire, moving commerce more wholly into the 21st century as companies ill-suited to compete digitally fall behind. Nice shout-outs to the bk world throughout.
J. Crew: Bk judge gives the company a break on paying landlords for two months. Landlords: “F#*& that!”
Podcast: Debtwire’s Richard Goldman sits down to talk PPP for debtors.
Gossip Column: Judge dishes a brutal slam to Neiman Marcus’ independent board member after MyTheresa entity transfer fraudulent conveyance hearing: “unprepared, uneducated, and borderline incompetent.”
Hazy Judgment: U.S. Justice Department sets policy that eliminates bankruptcy as an option for both cannabis businesses and their employees.
Stay safe, all. And thanks for reading.