Steve & Barry’s LLC announced on July 9th, 2008 that the Company has initiated cases under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, to address the Company’s financial challenges. The lead case number is 08-12579.
On August 26th, 2008, BHY S&B Holdings LLC, a newly formed affiliate of investment firms Bay Harbour Management and York Capital Management, completed its acquisition of substantially all assets of Steve & Barry’s.
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Press release announcing pending sales of certain assets of Steve & Barry’s to “BHY S&B Holdings LLC” (August 22, 2008)
BAY HARBOUR AFFILIATE RECEIVES COURT APPROVAL
TO ACQUIRE RETAILER STEVE & BARRY'S
(PORT WASHINGTON, New York, August 22, 2008) - Steve & Barry's LLC announced today that BHY S&B Holdings LLC, a newly formed affiliate of investment firms Bay Harbour Management and York Capital Management, has received Court approval to acquire substantially all assets of Steve & Barry’s. The acquisition is scheduled to be completed Monday, August 25th.
Under the terms of the $163 million purchase agreement, the majority of Steve & Barry's 276 stores will continue to serve customers nationwide, offering exclusive collections created with entertainers and athletes including Sarah Jessica Parker, Venus Williams, Amanda Bynes, Laird Hamilton, Ben Wallace and Bubba Watson, all of whom maintain a licensing relationship with Steve & Barry's. BHY S&B Holdings has made no decisions concerning which Steve & Barry's stores will close or when, although an announcement is anticipated in the next week.
In addition to acquiring merchandise inventories and transfer rights to Steve & Barry's store leases, BHY S&B Holdings will acquire all Steve & Barry's intellectual property rights, including its celebrity and brand licenses, and the company's key facilities, including its Port Washington, New York headquarters, Columbus, Ohio distribution center, and certain overseas offices.
Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm's holdings have included the retailer Barneys New York, the facilities based CLEC Telcove, and the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino following its rebranding and turnaround.
York Capital Management is an SEC registered investment advisor with offices in New York, London, and Hong Kong with more than $15 billion in assets under management. York Capital was founded in 1991 and specializes in value oriented and event driven equity and credit investments.
About Steve & Barry’s
New York-based Steve & Barry’s is a leading national casual apparel retailer that offers high quality merchandise at astonishing low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. At STEVE & BARRY’S ® stores, shoppers will find brands they can’t find anywhere else, including the BITTEN™ collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY™ collection of athletic and lifestyle apparel and sneakers created with NBA ® star Stephon Marbury. Steve & Barry’s is also the exclusive home of the DEAR™ collection by Amanda Bynes, the BIG BEN WALLACE™ collection , the ELEVEN BY VENUS WILLIAMS™ collection, the BUBBAGOLF™ collection by professional golfer Bubba Watson, and the WONDERWALL™ collection by surfer Laird Hamilton. Additional information and store locations can be found at www.steveandbarrys.com.
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Press release announcing “stalking horse bid” agreement (August 5, 2008)
COURT APPROVES STEVE & BARRY’S® “STALKING HORSE” AGREEMENT
AGREEMENT CALLS FOR BAY HARBOUR AFFILIATE
TO PURCHASE STEVE & BARRY'S AS A GOING CONCERN,
SUBJECT TO NEGOTIATION OF ACCEPTABLE RENEGOTIATED STORE LEASE PACKAGE
FAILING RENEGOTIATED STORE LEASE PACKAGE, AGREEMENT CALLS FOR
ALTERNATIVE SALE OF COMPANY'S ASSETS
(PORT WASHINGTON, New York, August 5, 2008) – Steve & Barry’s LLC announced that the U.S. Bankruptcy Court for the Southern District of New York approved today a "stalking horse" Asset Purchase Agreement with BH S&B Holding LLC, a newly formed subsidiary of investment firm Bay Harbour Management. Under the terms of the agreement, BH S&B Holdings would acquire certain of the company’s assets for $163 million. Subject to acceptable negotiation of lease terms prior to the final auction date, BH S&B Holdings’ expressed intent is to continue to operate the chain of Steve & Barry’s retail stores as a going concern, with current staff and key facilities, including the company’s New York headquarters, Columbus, Ohio distribution center, and certain overseas offices.
The assets to be acquired include but are not limited to: certain Steve & Barry’s store leases; all Steve & Barry’s merchandise, with the exclusion of any product located at stores not purchased by BH S&B Holdings; and all Steve & Barry’s intellectual property rights, including its celebrity and brand licenses. Further due diligence will determine which Steve & Barry’s renegotiated store leases BH S&B Holdings would acquire should the Asset Purchase Agreement be approved by the Court. The Company has further entered into an agency sale agreement for inventory in stores where the Company and BH S&B Holdings cannot accomplish an appropriate package of renegotiated leases and other conditions. In this circumstance, Hilco Merchant Resources LLC becomes the stalking horse bidder with intention of conducting a final sale of the company’s inventory.
The stalking horse proposal will serve as the opening bid during an auction process that is scheduled to take place in August, and will be subject to higher and better offers.
Bay Harbour Management is an SEC registered investment advisor with significant experience in purchasing distressed companies and effectuating their turnaround. The firm’s holdings have included the retailer Barney’s New York, Telcove, and the rebranding and turnaround of the former Aladdin Casino, now operating on the Las Vegas strip as the Planet Hollywood Resort and Casino.
About Steve & Barry’s
New York-based Steve & Barry’s is a leading national casual apparel retailer that offers high quality merchandise at astonishing low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. At STEVE & BARRY’S ® stores, shoppers will find brands they can’t find anywhere else, including the BITTEN™ collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY™ collection of athletic and lifestyle apparel and sneakers created with NBA ® star Stephon Marbury. Steve & Barry’s is also the exclusive home of the DEAR™ collection by Amanda Bynes, the BIG BEN WALLACE™ collection , the ELEVEN BY VENUS WILLIAMS™ collection, the BUBBAGOLF™ collection by professional golfer Bubba Watson, and the WONDERWALL™ collection by surfer Laird Hamilton. Additional information and store locations can be found at www.steveandbarrys.com.
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Press Release announcing filing (July 9th, 2008)
STEVE & BARRY’S® INITIATES CHAPTER 11 CASE
Steve & Barry’s Stores Open and Serving Customers as Usual
Taking Steps to Reduce Operating Expenses
(PORT WASHINGTON, New York, July 9, 2008) – Steve & Barry’s LLC and 63 of its affiliates announced today that they have initiated cases under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York, to address the Company’s financial challenges.
Steve & Barry’s stores and operations across the nation, including its 276 retail locations, are open today and conducting business as usual. The Company’s gift cards and store credits will continue to be honored as always, and its return policies will remain in place.
The Company said that the commencement of Chapter 11 cases was based on a combination of factors, including a liquidity shortfall as a result of credit market volatility and general economic conditions, which, in turn, have impacted the Company’s store opening plans and borrowing capacity. The Company has performed very well from a sales perspective, with total sales in the first five months of 2008 up 70%, average store sales up 25%, and comparable store sales up 15%. In particular, its exclusive branded lines of merchandise created with high-profile entertainers and athletes have performed exceptionally well.
As part of the Chapter 11 process, the Company is moving forward with operational improvements in tandem with exploring a potential sale of the Company and/or its assets, to repay outstanding debt.
The operational improvements include taking immediate steps to reduce expenses through staff reductions, office consolidations, and other actions. Steve & Barry’s began this initiative today with the reduction of 172 corporate and field staff positions.
The Company also filed customary “First Day” motions to support its employees, customers and suppliers by providing for the Company’s corporate and field associates to continue to be paid in the usual manner, and for their medical, dental, life insurance, disability and other benefits to continue without disruption. Suppliers will be paid under normal terms for goods and services provided after the filing date of July 9, 2008. The Company has obtained an agreement from its secured lenders to use cash collateral for its operating needs.
Steve & Barry’s Founders and co-CEOs Steve Shore and Barry Prevor commented, “Steve & Barry’s opened its first store 23 years ago with the mission of providing affordable, quality clothing to everyone. This mission has grown beyond our wildest dreams, providing our customers with 80 million units of affordable clothing and accessories during the past year alone – including products designed and endorsed by celebrities who have believed in our vision. Every one of these lines has met with great success. BITTEN™, by Sarah Jessica Parker, transformed our stores overnight into a destination for women shoppers and has grown at an unprecedented pace since its launch in June 2007.
“Unfortunately, in the current credit and economic environment, this has not been enough. High costs of materials and fuel prices have increased our cost of goods and cost of operating. Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases. The generally poor environment for apparel retailers has reduced funding to our suppliers, landlords, and to our Company. It has become increasingly difficult for us to continue operating normally under these circumstances.
“Every member of our management team has been devastated by these events and is deeply sorry to all of our employees and partners who have been affected by the Chapter 11 filing.” A more detailed statement from Steve Shore and Barry Prevor, Founders and co-CEOs of Steve & Barry’s, is attached.
About Steve & Barry’s
New York-based Steve & Barry’s is a leading national casual apparel retailer that offers high quality merchandise at astonishing low prices for men, women and children. Founded in 1985, the company operates 276 anchor and junior anchor shopping center and mall-based locations throughout the U.S. At STEVE & BARRY’S ® stores, shoppers will find brands they can’t find anywhere else, including the BITTEN™ collection, the first-ever apparel line created by actress and global fashion icon Sarah Jessica Parker, and the STARBURY™ collection of athletic and lifestyle apparel and sneakers created with NBA ® star Stephon Marbury. Steve & Barry’s is also the exclusive home of the DEAR™ collection by Amanda Bynes, the BIG BEN WALLACE™ collection , the ELEVEN BY VENUS WILLIAMS™ collection, the BUBBAGOLF™ collection by professional golfer Bubba Watson, and the WONDERWALL™ collection by surfer Laird Hamilton. Additional information and store locations can be found at www.steveandbarrys.com.
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Statement from Steve Shore and Barry Prevor,
Founders and co-CEOs of Steve & Barry’s
We deeply regret that our company has filed for protection under Chapter 11 of the U.S. Bankruptcy Code and the effect it has on so many dedicated people and organizations. Steve & Barry's opened its first store 23 years ago with the mission of providing affordable quality clothing to everyone. This mission has grown beyond our wildest dreams, providing our customers with 80 million units of affordable clothing and accessories during the past year alone. We have commenced this reorganization case only because we have exhausted all alternatives and have no other choice.
During these 23 years, Steve & Barry's has grown together with countless suppliers and service providers. We have often opened retail locations in economically-challenged areas with household-income levels, crime rates and population trends that caused other retailers to abandon the neighborhood. Economic growth, access to affordable merchandise, and thousands of jobs were created in areas that were most in need. We weathered ups and down in our business and the economy, and still managed to grow the business every year to the current 276 stores in 39 states.
During the past two years, Steve & Barry's launched products designed and endorsed by celebrities and athletes who have believed in our mission. Our first women's brand, BITTEN by Sarah Jessica Parker, transformed our stores overnight into a destination for women shoppers, winning accolades from consumers and performing at an unprecedented level since its launch. Every one of our partner lines has met with tremendous success, on track to sell millions of units, making great leaps in the style and quality of our offerings, and spreading the word about Steve & Barry's accessible quality to millions of new customers. The dedication and support of each of our celebrity and athlete partners has been incredible.
2008 continued the long history of growth at Steve & Barry's. In a very difficult environment for retail apparel sales, January to May 2008 brought a 70 percent increase in total sales compared to the same period in 2007, a 15 percent increase in comparable store sales, and a 25 percent increase in average store sales. Thousands of dedicated people worked around the clock to achieve these results.
Unfortunately, in the current credit and economic environment, this has not been enough. High costs of materials and fuel prices have increased our cost of goods and cost of operating. At the same time, our customers are not in a position to pay higher prices, impacting our operating margins. Our customers are feeling the pain of high food and gas prices and declining home values, and many of them are being forced to shop closer to their homes and cut back on discretionary purchases. The generally poor environment for apparel retailers has reduced funding for our suppliers, landlords, and for our company. Since mid-2007, difficult credit markets have caused delays in store openings and landlord reimbursements for store-opening expenditures advanced by the company which have created cash shortages. The Company invested substantially more in capital expenditures last year than the amounts reimbursed, and unfortunately, the Company has not yet had an opportunity to fully realize the planned returns from these investments.
These challenges have impacted operations, caused inventory and fixtures to lie idle while incurring interest and storage costs, and reduced liquidity. Even with our strong growth and sales performance which far outpaced the industry, tough economic times, the credit crisis, and a landscape of other troubled retailers reduced the appraised value of our inventory and our access to funding. Recent rumors and speculation surrounding Steve & Barry's financial situation have become self-fulfilling prophecies. Many suppliers are rightfully nervous and cutting off access to services and supplies. Landlords have stopped remitting contractually-owed payments for construction and store opening work performed by Steve & Barry's. As a result of all of this, our loans have gone into default, and we have had no alternative but to file Chapter 11 to enable continued operations.
Every member of our management team has been devastated by these events. Our employees, vendors, and landlords have been our partners and friends over the past 23 years, and there are no words to express our grief and disappointment in the current situation. We have been through 23 years of economic cycles, but we never thought it would be possible for things to change so quickly and dramatically. We brought on the best advisors and experts in the industry, but we were not able to find a solution without filing for Chapter 11 protection.
The management of Steve & Barry's is deeply sorry to all who have been affected. We are in discussions with potential strategic and financial partners and working on solutions for a stronger Steve & Barry's to emerge from this process. We will continue to do everything possible to achieve the best outcome under the circumstances.
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FAQ for Customers
• Steve & Barry’s stores and operations across the nation, including our 276 retail locations, are open today and conducting business as usual.
• Our gift cards and store credits will continue to be honored as always, and our return policies will remain in place.
1. Is the Company closing stores?
All of the Company’s stores are open today and serving shoppers as usual.
2. A store is scheduled to open in my neighborhood. Will it still open?
BHY S&B Holdings has made no decisions concerning any new stores that had been expected to open during the remainder of 2008.
3. Will the company be raising prices as a result of the filing?
The Company has announced no changes in its pricing or product offering.
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FAQ for Vendors
1. Where did Steve & Barry’s file for Chapter 11? What is the case number? Which judge is overseeing the case?
Steve & Barry’s initiated Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of New York. The lead case number is 08-12579. The case is being overseen by the Honorable Allan L. Gropper.
2. Will the Company continue to operate?
On August 26th, 2008, BHY S&B Holdings completed its acquisition of substantially all assets of Steve & Barry’s. A majority of Steve & Barry’s stores will continue to operate on a go-forward basis. An announcement is expected soon regarding the go-forward plan.
3. If I am a creditor and have a claim, where can I obtain more information about the claims process?
Information regarding the claims process is available at the web site, http://chapter11.epiqsystems.com/steveandbarrys .
4. Who is the legal counsel for Steve & Barry’s LLC and its affiliates?
Steve & Barry’s is represented in its Chapter 11 case by Weil, Gotshal and Manges. The firm’s address is 767 Fifth Avenue, and the phone number is 212-310-8000.
5. Who is the Company’s financial advisor?
The Company’s financial advisor is Conway DelGenio Gries & Co., LLC.
6. I don’t understand the bankruptcy process and am not sure what to do. What would you advise?
We suggest you discuss this matter with your company’s legal counsel.
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Claim Agent Site for Vendors
If you are a vendor and need to file a claim, please visit the following website:
http://chapter11.epiqsystems.com/steveandbarrys