May 12, 2017
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Bachrach files for bankruptcy in LA

May 12, 2017

Los Angeles-based men's store Bachrach is the next retailer on the docket in bankruptcy court, with its parent company B&B Bachrach LLC having recently filed for bankruptcy protection in LA.

The company cites consumers turning to online shopping as the reason for its business failings and wants to shutter retail stores to gain solvency. It operates 24 stores selling men's apparel and claims it was profitable until 2016 when consumer retail preferences took a hard turn towards e-commerce.

This is not Bachrach's first bankruptcy filing. In 2005, operations of over 75 stores led the chain into bankruptcy where it was acquired by Sun Capital Partners.

Presumably, one of the reasons it has filed for bankruptcy protection this time is to get out of a deal it held with Simon Properties Group. According to court papers, Bachrach had to lease retail space in Simon's lower tier Class C malls in order to also have a presence in the top Simon locations.

Bachrach opened 17 new stores in 2012 but claims the Class C stores were a source of loss, even though according to court papers the chain saw an overall growth of gross sales that peaked at almost $19 million in 2014.

According to the pleadings, Bachrach was not able to grow its ecommerce sales enough to keep up with competitors. E-commerce sales expanded from $1 million in 2015 to $1.2 million in 2016, but that was not enough to survive.

Bachrach has listed $11.3 million in assets and $12.4 million in liabilities in its pleadings which indicates that a quick restructuring is possible.

Brian Davidoff, Bachrach's bankruptcy attorney explained, “Many of the retailers who have been restructuring or filed bankruptcy had the idea that they would sell the company or restructure, but they haven’t been able to survive because there were no buyers for them."

Bachrach now is using its bankruptcy filing to try to close 13 of its most unprofitable stores while keeping the 11 most profitable ones open.

Davidoff claims Bachrach's financial woes will be solved by closing stores and downsizing. In pleadings, he points to the success of the profitable stores in its chain as a source of optimism for continuing operations.

Undoubtedly this request will be challenged by Simon due to their existing contract. It is highly likely the locations Bachrach wants to close are the less desirable Class C stores it is contractually bound to operate.


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