Kirkland Latest Firm to Bag Bankruptcy Role From Ailing Retailers
BCBG Max Azria Group LLC, a high-end women's fashion house struggling with $685 million in debt, turned to Kirkland & Ellis this week to handle its bankruptcy filing Wednesday in New York.
Started by French-Tunisian fashion designer Max Azria, BCBG is the latest casualty in a struggling retail sector. Last month other companies such as Eastern Outfitters LLC, Limited Stores LL and The Wet Seal LLC found themselves filing for Chapter 11 protection.
In its bankruptcy case in the Southern District of New York, BCBG lists between $100 million and $500 million in assets against $500 million to $1 billion in liabilities. The Vernon, California-based company, whose general counsel is Erica Alterwitz, is looking to either sell itself in a bankruptcy court-supervised auction in May or attempt a debt-for-equity swap with junior lenders.
Kirkland restructuring partners Joshua Sussberg, Christopher Marcus and James Sprayregen are advising BCBG in Chapter 11. The firm has not yet filed billing statements with the bankruptcy court. Sussberg, who has blogged about his battle with lymphoma, did not return a request for comment. He joined Kirkland as an associate in early 2008 from Weil, Gotshal & Manges, which Marcus left later that same year to join Kirkland. (Sprayregen, a longtime Kirkland partner, also returned to the firm in late 2008 after a nearly three-year stint at The Goldman Sachs Group Inc.)
According to a list of BCBG’s 50 largest unsecured creditors, the fashion line owes $781,243.32 to Winston & Strawn, whose co-chair Dan Webb is listed on the filing. Webb’s biography page on Winston & Strawn’s website lists BCBG as one of the high-profile litigator’s clients.
Webb did not respond to a request for comment about BCBG, which derives its name from the French phrase “bon chic, bon genre.” Azria founded the company in 1989 and opened its first boutique in Los Angeles three years later. Over the next three decades, BCBG expanded to 550 locations across Canada, Europe, Japan and the U.S.—although 120 were shuttered in January—and it has distribution partnerships with department stores like Bloomingdale’s Macy’s and Saks Fifth Avenue. The company hopes to use the bankruptcy process to consolidate its operations.
Consumer trends in the retail industry have bedeviled BCBG and other brands, including New York-based fashion house Bibhu Mohapatra, which in January sought Chapter 11 protection in the Southern District of New York. Bibhu, being represented in bankruptcy court by solo practitioner Alla Kachan, listed in its Chapter 11 petition legal debts of $50,122 to Kilpatrick Townsend & Stockton and $30,179 to now-shuttered New York firm Vandenberg & Feliu.
The Limited, a New Albany, Ohio-based women’s apparel chain, filed for bankruptcy in January in Delaware. Klehr Harrison Harvey Branzburg is advising the debtor in Chapter 11 proceedings, while Kelley Drye & Warren has picked up the role advising an official committee of unsecured creditors.
Eastern Outfitters filed for bankruptcy in Delaware on Feb. 5, owing $66,344 to Klehr Harrison. Bracewell financial restructuring partners Robert Burns and Jennifer Feldsher in New York are working with Delaware counsel Cole Schotz in advising the Meriden, Connecticut-based parent company of discount clothing and footwear chain Bob’s Stores and outdoor retailer Eastern Mountain Sports in its Chapter 11 case.
Burns is a Chapter 11 veteran who made news last year when White & Case announced he would be joining the firm from Bracewell, which had changed its name in early 2016 following the departure of former name partner and ex-New York City Mayor Rudolph Giuliani. But Burns chose to stay at Bracewell, which in court filings last month stated that it had received a $500,000 retainer for its services in the case. (Burns and Feldsher are both billing $1,000 per hour for their work.)
Eastern Outfitters is owned by private equity firm Versa Capital Management LLC, which also owns The Wet Seal, a young women’s clothing retailer that filed for bankruptcy last month in Delaware. Local firm Young Conaway Stargatt & Taylor is advising The Wet Seal in bankruptcy, a so-called Chapter 22 filing by the company because it had previously been in Chapter 11 two years before.
Michigan’s Warner Norcross & Judd grabbed the lead role advising Grand Rapids-based MC Sports on the Midwestern sporting goods retailer’s bankruptcy filing in its home city last month, while large Minneapolis firm Fredrikson & Byron is reportedly advising St. Paul, Minnesota-based Gander Mountain Co. as the outdoor retailer prepares for a potential Chapter 11 filing.
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