A bankruptcy court has approved Ascena Retail Group’s Chapter 11 plans.
Under the plans, Ascena — which owns Ann Taylor, Lane Bryant, Loft and Lou & Grey — will be renamed Mahwah Bergen Retail Group.
Ascena originally filed for bankruptcy last July. In December, private equity firm Sycamore Partners agreed to acquire the company — and bring it out of bankruptcy — for $540 million. The deal is valued at $1 billion overall.
As of Oct. 31, 2020, Ascena had total assets of $2.2 million and total liabilities of approximately $3 million. A representative for Ascena did not respond to a request for comment.
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Under the terms of the deal, first disclosed late last year, 900 of the company’s stores were required to remain open — but a big mall owner has challenged Sycamore’s intentions to keep up that end of the agreement.
Simon Property Group, the country’s largest mall owner, objected to the plan after Sycamore disclosed its intention to close 160 stores in Simon-owned malls.
The mall owner told the court in February that Sycamore was preparing to violate the spirit of the restructuring plan by preserving stores whose leases expired the soonest. Once the plan took effect, leases would expire, leading to the closure of more locations.
Sycamore “has repeatedly bankrupted retailers it acquired to the detriment of their creditors,” the objection reads. The document goes on to cite Sycamore’s alleged failure with retailers Nine West and Belk.
Mall owner Taubman filed an objection backing up Simon’s.
It’s not the first time Simon has clashed with Sycamore.
Sycamore similarly previously offered $1.75 billion to buy J.C. Penney, which is now owned by Simon Property Group and Brookfield Asset Management. Under their plan, Sycamore would rebrand 250 JCPenney stores to the Belk name and liquidate the rest. The plan was eventually rejected.
As a seasoned expert in bankruptcy law and corporate restructuring, I've closely followed the intricate details of various high-profile Chapter 11 cases. My extensive experience allows me to analyze and interpret complex financial transactions, legal proceedings, and strategic maneuvers within the realm of distressed companies.
Now, diving into the recent developments surrounding Ascena Retail Group's Chapter 11 plans, it's evident that the bankruptcy court has greenlit Ascena's restructuring efforts. Ascena, a company owning well-known brands like Ann Taylor, Lane Bryant, Loft, and Lou & Grey, initially filed for bankruptcy in July. The court-approved plans include a significant transformation – the rebranding of Ascena to Mahwah Bergen Retail Group.
A pivotal moment in Ascena's journey occurred in December when private equity firm Sycamore Partners stepped in to acquire the beleaguered company for a substantial sum of $540 million, ultimately valuing the deal at $1 billion. As of October 31, 2020, Ascena's financials reflected total assets of $2.2 million and total liabilities hovering around $3 million.
The intricacies of the deal emerge in the requirement for 900 of Ascena's stores to remain operational. However, complications arose when Simon Property Group, the nation's largest mall owner, contested Sycamore's intentions to uphold this aspect of the agreement. Simon objected to the plan after Sycamore revealed its plan to shutter 160 stores located in malls owned by Simon.
This dispute between Sycamore and Simon unveils a broader context. Simon has raised concerns about Sycamore's track record, citing instances where the private equity firm allegedly failed in its dealings with other retailers like Nine West and Belk, claiming that Sycamore has a history of bankrupting the companies it acquires, to the detriment of their creditors.
Furthermore, another mall owner, Taubman, supported Simon's objection, intensifying the clash between Sycamore and the major players in the retail and real estate sectors. This conflict isn't entirely unprecedented, as Simon and Sycamore had previously encountered disagreements during the attempted acquisition of J.C. Penney.
In that instance, Sycamore's proposed purchase of J.C. Penney, backed by a $1.75 billion offer, faced opposition from Simon Property Group and Brookfield Asset Management, the current owners of J.C. Penney. The plan involved rebranding 250 JCPenney stores to the Belk name and liquidating the rest, but it was ultimately rejected.
The ongoing tensions between Sycamore Partners and major mall owners underscore the intricate dynamics and challenges present in corporate restructurings, particularly when it comes to preserving the viability of retail locations and navigating complex lease agreements within the context of bankruptcy proceedings.
