Within the last week, two (2) retailers filed for Chapter 11 bankruptcy protection, Heritage Home Group LLC and Real Mex Restaurants. Heritage originally emerged after a 2013 bankruptcy of the Thomasville, Broyhill, and Lane furniture brands, and Rex Mex operates Chevys Fresh Mex, El Torito, and other full-service restaurant brands. Both filed in the United States Bankruptcy Court District of Delaware, cases 18-11736 and 18-11795 respectively.
Additionally, Reuters and CNBC are reporting that Mattress Firm Inc., the largest U.S. mattress retailer, is also contemplating Chapter 11 filing.
Both Heritage Home Group and Real Mex previously filed for Chapter 11 bankruptcies within the last seven (7) years, reducing their store numbers. Heritage sold its Lane-branded lines of business late last year, and plans for the Chapter 11 proceeding launched on Sunday include at least one auction and sale of the rest of the brands. Heritage already has a $17.45 million offer for its luxury line of brands, and it appears that they are trying to sell the non-luxury core brands of Thomasville, Broyhill, and Lane to a single buyer.
Real Mex, meanwhile, agreed to sell its assets to Z Capital Group and to facilitate the sale it voluntarily filed for Chapter 11 bankruptcy protection. Reuters reports that this filing will allow the Z Capital Group, which is a co-owner of Real Mex, to take total ownership of the brand through asset sale.
Asset sale/auction is expected to be held within the next 60 days for both companies.
For the time being, Mattress Firm is considering a potential bankruptcy filing, as well as shuttering some of the 3,000 stores open across the country. Reportedly this is another side effect of brick and mortar stores no longer being able to keep up with e-commerce websites like Amazon.com.
Mattress Firm’s South African parent company, Steinhoff International Holdings, has been working on a deal to restructure the debt of some of its subsidiaries with its creditors. This came after a recent account scandal, which has since snowballed into a class-action lawsuit. Steinhoff originally acquired Mattress Firm in 2016.
These companies are part of a wave of other retailers with heavy debt loads looking for relief in Chapter 11 bankruptcy.
If you are a landlord with any of these stores it is important to know your rights, now. Stark & Stark’s Shopping Center & Retail Development Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of Delaware, Eastern District of Missouri, District of New Jersey, Southern District of New York, District of Minnesota and Eastern District of Pennsylvania on a variety of issues.
Most recently, our Shopping Center Group has represented landlords and trade creditors in the Charming Charlie, Toys R Us, Macaroni Grille, Joe’s Crab Shack, Payless, Eastern Outfitters (EMS Part 2), EMS, Golfsmith, RadioShack, General Wireless (RadioShack Part 2), Gander Mountain, and A&P, Chapter 11 bankruptcy cases.
For more information on how Stark & Stark can assist you, please contact Thomas Onder, Shareholder, at (609) 219-7458 or tonder@stark-stark.com. Mr. Onder writes regularly on commercial real estate issues and is an active member of ICSC and Chair of the ICSC PA/NJ/DE Conference and Deal Making Show for 2018 in Philadelphia this September.
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