Play Time's Over—Three Firms Take Roles on Gymboree Bankruptcy

Kirkland & Ellis added another key bankruptcy case to its restructuring portfolio this week as San Francisco-based children’s clothing retailer The Gymboree Corp. filed for Chapter 11 protection Sunday in Richmond, Virginia.

Gymboree, which is owned by Boston-based buyout firm Bain Capital LP, is the latest retailer to go bust this year. Kirkland restructuring partners James Sprayregen, Anup Sathy and Steven Serajeddini in Chicago and partner Joshua Sussberg in New York are advising Gymboree, which lists almost $755.5 million in assets against $1.36 billion in liabilities in its Chapter 11 petition.

Sussberg, a lymphoma survivor, is also working with Sprayregen on the bankruptcy earlier this year of New York-based women’s fashion house BCBG Max Azria Group LLC. The American Lawyer reported earlier this month on Kirkland’s role advising teen fashion retailer Rue21 Inc. on its Chapter 11 filing, as well as its work for troubled shoe retailer Payless ShoeSource Inc.

Court filings show that Gymboree has also sought to retain Kutak Rock’s Richmond managing partner Michael Condyles and bankruptcy partners Peter Barrett and Jeremy Williams as local counsel in its bankruptcy case. Munger, Tolles & Olson is seeking to advise a special committee of Gymboree’s board of directors in the matter. None of the firms, including Kirkland, has yet filed billing statements with the bankruptcy court.

Gymboree is seeking to slash roughly $900 million in debt through the bankruptcy process. The debtor also plans to close up to 450 of its 1,281 stores and lay off thousands of workers as it pursues a reorganization plan that will see lenders assume control of the company from Bain Capital. Gymboree has lined up $35 million in debtor-in-possession financing.

Wilson Sonsini Goodrich & Rosati and Skadden, Arps, Slate, Meagher & Flom took the lead for Gymboree in late 2010 on its $1.8 billion sale to Bain Capital Partners LLC, which was advised by Ropes & Gray. Kirkland, which has a long history of handling transactional work for Bain Capital, has also been doing work for Gymboree for some time. The company retained the firm back in 2014 to explore potential restructuring options.

Court filings reveal that Weil, Gotshal & Manges business finance and restructuring co-chair Matthew Barr—who joined the firm in 2015 from Milbank, Tweed, Hadley & McCloy—and partner Robert Lemons are advising Bain Capital in Gymboree’s bankruptcy case. Milbank and McGuireWoods are representing the term loan lenders poised to acquire the company.

Gymboree’s longtime general counsel is Kimberly Holtz MacMillan. The company, founded in 1976, also owns other children’s brands like the discount Crazy 8 chain and more upscale Janie & Jack.

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