Express Warns of Potential Liquidation if Proposed Buyout Not Completed Quickly Amid Bankruptcy

Express Inc., the bankrupt clothing retailer, has cautioned that it could face liquidation if a proposed buyout deal can't be reached promptly.

The company has secured $35 million in new financing to support its operations during the Chapter 11 process, but this funding is contingent upon Express reaching a definitive agreement within a 30-day timeframe, as stated by CEO Stewart Glendinning in a sworn statement.

During a court hearing, Express lawyer Josh Sussberg stressed the urgency of the situation, warning that without a timely restructuring, the costs associated with the Chapter 11 case could overwhelm the company. Express, a long-standing mall retailer, filed for Chapter 11 bankruptcy protection in Delaware federal court, seeking to expedite a sale of its retail operations to an investor consortium led by WHP Global.

As part of the bankruptcy proceedings, Express plans to close 95 of its stores and all UpWest outlets, while the remaining locations will continue to operate. The company has obtained $35 million in fresh financing from existing lenders and $49 million in cash from the IRS under the CARES Act to facilitate the transition process. The proposed transaction with the investor consortium, which includes WHP Global, Simon Property Group, and Brookfield Properties, aims to provide Express with additional financial resources and strategic positioning for profitable growth.

Why this matters: The potential liquidation of Express, a prominent mall-based retailer, highlights the ongoing challenges faced by traditional brick-and-mortar retailers in the rapidly evolving retail landscape. The outcome of the proposed buyout and restructuring efforts will have significant implications for the company's employees, customers, and the broader retail industry.

Express CEO Stewart Glendinning described the bankruptcy filing as a strategic move to accelerate the sale of most retail operations to the investor group. The company has been grappling with declining sales in recent years, attributed to increasing debt obligations, the financial burden of mall leases, and difficulties in adapting to shifting consumer preferences towards more casual attire. The bankruptcy proceedings are expected to provide relief for Express and enhance its appeal to potential buyers by allowing the company to shed costly leases, particularly in underperforming mall locations.

Key Takeaways

• Express is facing liquidation if the buyout deal does not reach an agreement within 30 days.
• Express secured $35M in new financing to support operations during Ch. 11.
• Express plans to close 95 stores and all UpWest outlets, remaining open.
• The proposed buyout by the investor consortium aims to provide financial resources.
• Bankruptcy filing to accelerate sale of retail operations to investor group.