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Nine West Settles Potential Lawsuits Against Sycamore Partners

Nine West Holdings Inc. unveiled Wednesday an amended restructuring plan that settles potential lawsuits against private-equity owner Sycamore Partners LP for $105 million in cash, far less than the amount the unsecured creditors committee is seeking, WSJ Pro Bankruptcy reported. Nine West reached the settlement with Sycamore Partners, minority owner KKR Credit Advisors (US) LLC, and its secured and unsecured term loan holders, according to the plan filed on Wednesday in the U.S. Bankruptcy Court in New York. But the new plan doesn’t have the support of the retailer’s unsecured creditors committee, which earlier this week sought the court’s permission to pursue its own lawsuits against Sycamore Partners for more than $1 billion in damages. Nine West said that the new plan has garnered the support of 80 percent of the company’s unsecured term loan holders and 85 percent of its secured debt holders.

Sears Will Likely End Up in Liquidation, Experts Say

Sears Holdings’ chapter 11 bankruptcy filing on Monday has some mall landlords excited about the opportunity to finally re-tenant Sears and Kmart stores that were paying below-market rents with healthy tenants, which could drive more revenue and shoppers, National Real Estate Investor reported. The storied retail chain plans to reorganize around a smaller store base. It will continue to operate the financially healthier stores while it reorganizes and negotiates with its creditors. Even if the company downsizes to a smaller store base, some industry experts say it would likely be more profitable to liquidate both chains. If the company does liquidate, it would dump about 100 million sq. ft. of vacant retail space on the market. “I’m sure it’s Lampert’s intention to emerge, but liquidation is a likely scenario,” says Lauren Leach, director of real estate advisory services at Birmingham, Mich.-based consulting and advisory firm Conway MacKenzie. “Sears has been selling its real estate for years now, so there’s no way its remaining collateral is worth enough to satisfy its debts.” The assets have been nearly all stripped, and any emergence from chapter 11 would surely involve many store closings and a breakup of the remaining valuable assets, says David Weiss, a partner at Chicago-based consulting firm McMillan Doolittle. Read more

Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store. 

Analysis: How the Hedge Fund Manager Running Sears Cut His Losses

Hedge fund manager Edward S. Lampert has spent the last 14 years steering Sears as it spun off businesses, took on debt and, this week, filed for bankruptcy protection, the New York Times reported. His hedge fund, ESL Investments, appears to have racked up a much more modest loss than the company’s chapter 11 bankruptcy filing would suggest, according to corporate filings and interviews with analysts and investors. ESL’s nearly 50 percent stake in Sears will probably be wiped out in bankruptcy. But that loss is offset by gains elsewhere. For example, Lampert has collected hundreds of millions of dollars in interest and fees from Sears. He also took stakes in businesses that were spun off from the company, and some of those investments are doing well.

Ultra Petroleum Still Fixing Balance Sheet

A $250 million deleveraging transaction fixes a potential default trigger for Ultra Petroleum Corp. but doesn’t solve underlying financial problems amid sliding natural gas prices, according to a ratings agency report, WSJ Pro Bankruptcy reported. Just over a year after exiting bankruptcy, Ultra is once against seeking concessions from creditors and announced a deal on Wednesday to exchange $824 million in bonds maturing in 2022 and 2025 for new securities and stock warrants. In addition to reducing Ultra’s debt by $250 million, the deal will cut cash interest expense by $14 million annually.

Lynn Tilton Weighs Sale of Dura Automotive

Financier Lynn Tilton is working with Jefferies Financial Group Inc. to seek buyers for auto-parts maker Dura Automotive Systems Inc., as she looks to unload some of her investment firm’s holdings to repay creditors, Bloomberg News reported. Dura, owned by Tilton’s Patriarch Partners, could fetch about $1 billion. Jefferies is preparing Dura for an auction likely to draw interest from private equity firms and other auto-parts suppliers. Dura comes to market after Tilton reached a legal settlement in May with bond insurer MBIA Inc. The agreement involved three bankrupt investment funds Tilton and MBIA had created to originate loans for distressed companies owned by her turnaround firm. Tilton agreed to step aside as head of the funds for at least 15 months, according to court documents. She can resume her position if she can repay MBIA and other creditors with proceeds from selling or refinancing some of her portfolio companies. The documents don’t publicly detail which ones.

Golden Nugget Is Approaching Caesars for Merger

Tilman Fertitta, the owner of the Golden Nugget casinos, has approached Caesars Entertainment Corp. about a possible merger, according to people familiar with the billionaire’s plans, Bloomberg News reported. The proposed deal would see closely held Golden Nugget acquired by its larger Las Vegas-based rival in a merger that values Caesars at about $13 a share. Revenue on the Las Vegas Strip has been tepid and Caesars, with a market value of $7.07 billion, disappointed shareholders this summer with a warning of tough conditions in the top U.S. gambling market. Under the plan proposed by Fertitta, who would become chairman and chief executive officer of the combined company, Caesars would sell the land and buildings associated with Landrys and Golden Nugget to a real-estate investment trust, said one of the people. Caesars would use some of that cash to repurchase its own shares, with Fertitta emerging as the largest single owner, the person said. Caesars has been led since 2015 by Mark Frissora, former chief executive officer of Hertz Global Holdings Inc. Many of the company’s largest shareholders are private equity funds such as Apollo Global Management and TPG, or distressed debt investors, that came aboard in a 2008 leveraged buyout or through a subsequent bankruptcy and restructuring of its largest division.