Exclusive: Lord & Taylor explores bankruptcy as stores remain closed during coronavirus pandemic

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(Reuters) – Lord & Taylor is studying the possibility of filing for bankruptcy after being forced to temporarily close all 38 of its US department stores in the aftermath of the coronavirus epidemic, people familiar with the matter said on Monday.

FILE PHOTO: The Lord and Taylor logo is photographed during Black Friday shopping in New York, New York, United States, November 23, 2018. REUTERS / Carlo Allegri

This is one of the many options that the retailer and its advisers are exploring, including trying to negotiate creditors’ relief and seek additional financing, sources said, adding that no final decisions have been made. .

Fashion rental services start-up Le Tote acquired Lord & Taylor last year from Saks Fifth Avenue owner, Hudson’s Bay Company, for C $ 100 million. Hudson’s Bay retained ownership of some of Lord & Taylor’s real estate and assumed responsibility for its rents, which amounted to tens of millions of dollars a year.

The sources requested anonymity because the proceedings are confidential. Lord & Taylor did not immediately respond to a request for comment. A Le Tote spokesperson said Lord & Taylor is exploring options and declined to comment further. A Canadian-based Hudson’s Bay official declined to comment.

Lord & Taylor is not alone among US department store operators forced to weigh the balance sheet in response to prolonged store closings following the coronavirus epidemic. The Neiman Marcus group plans to file for bankruptcy this week, while J.C. Penney Company Inc. is also considering a similar move, Reuters previously reported.

Lord & Taylor was famous for his display of vacation windows in his flagship on New York’s Fifth Avenue, but Hudson’s Bay sold the building to co-working space operator WeWork in 2019.

The Tote also owes C $ 33.2 million to Hudson’s Bay from a promissory note to the agreement.

The Tote acquired Lord & Taylor to expand beyond e-commerce in brick and mortar stores. It acquired the business of Lord & Taylor, including its merchandise inventory, its online business and most of its employees.

As part of last year’s agreement, Hudson’s Bay also secured a stake in Le Tote and two seats on the company’s board of directors. Hudson’s Bay officials have since resigned from the board, one of the sources said.

Many US companies grappling with the economic fallout from the pandemic have used public funds as part of a $ 2.3 trillion stimulus package. But most retailers were not eligible for assistance.

The National Retail Federation (NRF), which represents department stores and other stores and e-commerce businesses, asked the US Treasury last week to include them in government support programs.

“The Treasury has been a good partner, and we continue to work with them on this and a number of other important issues for our members,” the NRF said on Monday.

Report by Jessica DiNapoli and Mike Spector in New York; Additional reporting by Melissa Fares in New York; edited by Grant McCool

Our standards:Principles of the Thomson Reuters Trust.

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