Sycamore's Belk to Exit Bankruptcy Within One Day
By Soma Biswas
Department store chain Belk Inc. won bankruptcy-court approval
to cut $450 million in debt, emerging from a prepackaged chapter 11
case less than 24 hours after it was filed.
After filing for chapter 11 protection on Tuesday, Belk won
approval for its restructuring plan early Wednesday from Judge
Marvin Isgur in the U.S. Bankruptcy Court in Houston. Belk's sprint
through chapter 11 was the one of just a handful of cases that were
completed in under 24 hours.
Prepackaged bankruptcy filings are popular because they take
less time and cost less in administrative and professional fees.
But superfast bankruptcies like Belk's are rare. Only a handful of
companies have been able to go in and out of bankruptcy in a 24- or
48-hour time frame, including catalog retailer Fullbeauty Brands
Inc., which set the previous record in 2019 for the least time
between the filing of a chapter 11 petition and confirmation of an
Bricks-and-mortar retailers often spend more time in chapter 11
because they have dozens of landlords and typically use the
bankruptcy process to negotiate lower rents and close chunks of
their store base.
Charlotte, N.C.-based Belk, however, is using bankruptcy solely
to restructure its debt while paying vendors in full and assuming
the leases at its 291 stores, all of which are staying open,
according to court papers.
Judge Isgur expressed concern at Wednesday's court hearing about
whether all creditors were properly notified in advance of the
planned bankruptcy and had enough time to raise objections.
Justice Department bankruptcy monitors objected to Belk's sprint
through bankruptcy, saying the company was racing through the
process too quickly without giving creditors and others who might
have an interest in the chapter 11 case enough time to respond or
In response, the judge crafted a separate order to preserve the
rights of creditors or others to bring up potential objections in
bankruptcy court after confirmation. For example, even though Belk
has said it is assuming all of its leases, a landlord can still
contest Belk's right to assume the lease, the judge said.
Belk laid the groundwork for the bankruptcy months in advance.
After announcing the planned filing, Belk reached out 90,000
creditors, its lawyer Matthew Fagen said at the court hearing.
The restructuring plan will wipe $450 million in junior debt
held by KKR & Co. and Blackstone Group Inc. from Belk's balance
sheet, which stood at $1.9 billion before the bankruptcy.
Belk's private-equity owner Sycamore Partners is retaining a
majority stake in the retailer, while KKR, Blackstone and other
lenders will own the rest of the company.
As part of the plan, the lenders and Sycamore are investing a
combined $225 million in fresh capital in the form of a loan.
Belk's junior lenders voted unanimously in favor of the plan,
while 99% of top-ranking lenders voted to support it.
Write to Soma Biswas at email@example.com
(END) Dow Jones Newswires
February 24, 2021 16:48 ET (21:48 GMT)
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