Thursday, June 18, 2009

Let's Make a Deal

Eddie Bauer is the latest retailer to hit the showers. From a Reuters story today:

"NEW YORK (Reuters) - Outdoor apparel retailer Eddie Bauer Holdings Inc filed for bankruptcy for the second time in six years and said it would seek court approval to sell its assets to private equity firm CCMP Capital for $202 million."

Some still might associate a negative stigma (redundant?) with filing for bankruptcy. I shop at Eddie Bauer and didn't remember that they were bankrupt in the last decade. Nor did I know they were on shaky ground at the moment, so it hasn't affected my retail behaviour.

A WSJ story today highlights that fact that bankruptcy court may be the best place for a struggling company to get a deal done, especially given the importance of the debt holders in the process and the conflict between the debt and equity holders.

"Mergers-and-acquisitions professionals have lamented that frozen credit markets are stifling big business transactions. But Chapter 11 bankruptcy reorganizations have emerged as the hottest venue for quickly buying, trading and breaking up big-name companies.

Bankruptcy court is "a place where you can't afford not to be," said Jere Thomson, the head of law firm Jones Day's mergers and acquisitions practice in North America, who helped strike Chrysler Group LLC's recent alliance with Fiat SpA."

M&A is healthy most of the time. Keep the market moving.

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