Bankruptcy Insider today reported that both Goody’s Family Clothing and Linen’s ’n Things—two bankrupt retailers backed by private equity firms—had no luck selling their leases.
They’re asking the U.S. Bankruptcy for the District of Delaware to let them reject the leases in question. Prentice Capital Management-backed Goody’s tried to sell 67 leases and received offers on three; Apollo Management-backed Linens ‘n Things tried to sell 120 and managed to unload all of nine.
This may be no surprise—in today’s retail environment, no one is opening new stores (Ok, well there’s Tesco in India but that isn’t helping us here). I’m guessing Steve & Barry’s—a third bankrupt retailer backed by a PE firm—will have the same situation.
The most interesting thing about these failed auctions is the nine stores Linens did sell. Four were sold back to their landlords, but five of them went to Smart & Final—another Apollo Management-backed company. I’m not implying any sort of self-dealing impropriety here, since the deal was approved by the bankruptcy court, but still. You know times are tough when the only person showing up to the party is your own cousin. (Can we call fellow portfolio companies cousins?) Important to note, though, that the price Smart & Final paid for the leases wasn’t disclosed.